Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome Andrew McAvoy, who is the director of the rating policy division, and he will give us a brief opening statement.

Mr Andrew McAvoy (Department of Finance): There are three SL1s before the Committee today as we continue to progress the annual rating legislation. We have a little more time this year than we had last year when the Executive returned at the start of February.

The Committee has already cleared the SL1 for the small business rate relief scheme (SBRR). I will sign and lay the legislation associated with it in the coming days, and it will come to you for scrutiny.

Today's three SRs are tied in, again, with the turn-of-year billing exercise that we are undertaking in Land and Property Services (LPS). Those SRs are the Rates (Regional Rates) Order (Northern Ireland) 2025 — the technical vehicle for moving the regional rates — the Rates (Temporary Rebate)(Amendment) Order (Northern Ireland) 2025, which is the Back in Business scheme renewal for 2025-26, and the Rates (Exemption for Automatic Telling Machines in Rural Areas) Regulations (Northern Ireland) 2025 for rural ATMs for 2025-26 to provide that exemption for a further year.

We are now back on track with the annual cycle. Last year, the rural ATMs and Back in Business SRs were brought in in May, because we were playing catch-up in order to get the legislation passed. I will talk the Committee through each individual SL1 in turn. The Committee has already been briefed on the draft Budget and the Budget sustainability plan. Those are taken forward by a separate directorate in the Department. I am responsible for moving the legislation forward, so this is the vehicle that houses the Executive decision on the poundages. Like district councils at this time of year, everybody is setting the poundages for the forthcoming year.

The Committee may recall from last year that the SL1 is being brought forward at this early stage to progress things in order to increase the window for the Examiner of Statutory Rules to allow her to scrutinise the order when it comes through in due course, so as to facilitate the timings for the debate. This is the one bit of legislation that we do not want delayed, because it has an impact on the issuing of rates bills. That is why, in the cycle, legislation for the small business rate relief and regional rates come first each year.

The second SR, the Back in Business SR, builds on the restored scheme that came back into operation in May 2024. The SL1 that was issued to the Committee had 22 businesses noted as new businesses that have started since the scheme came back in, and there are 29 now. There is a pretty good spread of that, at the moment, across all 11 councils. The Minister has been doing quite a lot of work to promote the scheme, and she has been out meeting businesses. The Department is very keen to promote the scheme. Once we renew it, if it passes through the Assembly, we will boost its promotion further. The feedback that we have had from the businesses that have started up is that they very much welcome the scheme and the support that is provided to new businesses when starting up. Some of the neighbouring businesses have welcomed it as well because of increased footfall.

The cost of the schemes is notional, in that the property would likely have remained vacant but for the incentive to occupy — those are long-term vacancies of 12 months or more. One thing that we will be looking for, when promoting the scheme in the year ahead, will be to point out that it can apply to large retail units as well. A lot of new businesses are opening up and moving into small retail units, but large ventures can go in as well. As long as they occupy a former retail unit, they are eligible for the scheme.

We have been doing quite a bit of work to link up with the councils and some of the business organisations and business improvement districts (BIDs) in order to promote the scheme. We have also been working alongside local government and making plans for the year ahead to work with the Department for Communities to align with its grant provision. That will give the scheme a boost by coupling it with small grant schemes that the Department for Communities already has in place. Belfast has a particularly good one, called Vacant to Vibrant, which allows businesses to get small start-up grants.

Turning to rural ATMs, the Committee may recall, from discussion last year, a Supreme Court decision that was taken a number of years ago to take most of the automatic telling machines out of the valuation list. There are only 180 ATMs across Northern Ireland now that are valued separately and are on the list, and, of those, 26 are in rural areas, which is 14% of ATMs. When we previously surveyed the banks and building societies on the scheme, they said that the exemption was not enough to incentivise them to put a machine into an area, but it was enough to allow them to maintain the ones that are there. The scheme is really about keeping those ATMs. The number stays the same from last year; as I said, there are 26. It maintains the provision that is there at least. The Minister might, in the months ahead, particularly as the small business rate review comes on stream, look at other measures that could be taken to enhance the access-to-cash consideration. That will be looked at as part of the small business rate relief, which is first up in the strategic review.

There are three more SRs to be brought forward under our plan. The Committee does not have the SL1 yet because they are negative SRs. At the end of the session, or now, I can talk you through what those will be.

The Chairperson (Mr O'Toole): Will you talk about those at the end, please? We are talking about the regional rates order for the entire year, and then the other ones. The regional rates order overall is a little bit bigger than the rural ATM one, not that I am diminishing the rural ATM one.

Mr McAvoy: All three are clubbed together because —

The Chairperson (Mr O'Toole): They are all very important in their own way, but regional rates —.

Mr McAvoy: — they are all affirmative and require debate, which is why they are grouped together.

The Chairperson (Mr O'Toole): I am not sure that it is completely understood among the public yet that the Executive have, effectively, agreed a proposed rates increase for 2025-26. Given that the Executive's agreed position, so far as I understand it, is that the regional rate will increase by 5% for domestic customers and 3% for non-domestic customers, will you give a —?

Mr McAvoy: The draft Budget is predicated on those uplifts, but the Executive have not yet agreed to them. That is a process that is still ongoing.

The Chairperson (Mr O'Toole): That is helpful to clarify in people's minds, because I am not sure that that is totally understood by the public, or even the media. It is important to say that. You clarified that the Executive have not agreed to a 5% increase, but that is implied in the —.

Mr McAvoy: The draft Budget is predicated on it.

The Chairperson (Mr O'Toole): Is that on 5% for domestic and 3% for non-domestic rates?

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): Are you able to tell us, based on an average net annual value (NAV) on the non-domestic and domestic side, what, on average, that would be in cash?

Mr McAvoy: The uplift on the domestic side is about 60p per week.

The Chairperson (Mr O'Toole): That is for an average domestic property. What is that NAV, a bit less than £200,000?

Mr McAvoy: It depends on whether it goes through, but that is what we are talking about. The average property is £123,000 —

The Chairperson (Mr O'Toole): That is based on information from 2005.

Mr McAvoy: That is the capital value, and that would be the uplift that is applied to it. It is harder to estimate the increase on the non-domestic side because —

The Chairperson (Mr O'Toole): Reliefs.

Mr McAvoy: — it is harder to select an average NAV. There are so many different types of non-domestic properties.

The Chairperson (Mr O'Toole): The 5% and 3% are implied in the draft 2025-26 Budget. They are also —

Mr McAvoy: They raise £42·6 million combined. That is what is fed into the Budget line.

The Chairperson (Mr O'Toole): Is that £42·6 million included the Budget sustainability plan, too?

Mr McAvoy: It is informed by the Budget sustainability plan. Effectively, the only role that I have is in moving the legislation through, once that decision is taken.

The Chairperson (Mr O'Toole): I am aware that you are not the one who is agreeing to that number.

Mr McAvoy: It is a very difficult balance.

The Chairperson (Mr O'Toole): Sure. That is useful.

In relation to the strategic roadmap, at the minute, there is a process — tell me if this is wrong — to review on an ongoing basis the rating policy framework, but there is no specific proposal before the Executive, or even in draft form, to substantively change the rating system in the way that was mooted a few months ago, by reforming the domestic cap. There is no extant proposal live, or before the Executive.

Mr McAvoy: There is nothing before the Executive at the moment. The Minister has laid out what she is going to do in terms of the strategic roadmap for the rating system and is working through that process. The first stage is that, in the next few days, we will launch the consultation on the cap and the early payment discount (EPD).

The Chairperson (Mr O'Toole): The domestic cap.

Mr McAvoy: The domestic cap, yes. Some research on the cost of doing business has been undertaken for 2025-26 by colleagues in the strategic policy division.

The Chairperson (Mr O'Toole): Is that with the Ulster University?

Mr McAvoy: Yes. Gareth Hetherington and Karen Bonner in the Ulster University Economic Policy Centre (EPC) are taking that forward. That work will be used to inform the next two phases of the strategic review cycle, which are on the small business rate relief scheme and the non-domestic vacant rating exclusions.

The Chairperson (Mr O'Toole): In some cases, you can say, "It's the intent. I am the Minister; I want to do this. I am consulting on it", or you can say, "I might do this in the future, and I'd like your ideas", and, obviously, in this context, that could mean a number of different things. Am I right in saying that it is more the latter than the former, and that this is not agreed Executive, or even ministerial, policy? These are things that might happen in the future, and she is getting a wide range of views on them.

Mr McAvoy: Once we hit April, there will be a consultation element on what the Minister plans for the small business rate relief scheme, for example, but we want to drive it a bit deeper than what a normal consultation process would give us. We will also want to bring, almost, a critical-friend function into that to double-check our thinking when that comes through. Primarily, we want to break down all of these supports completely; look at the cohort of ratepayers that is getting support through them; look at the distribution of the costs and where they fall across the 11 councils; and pair the findings with the Executive's priorities and examine whether they are still fit for purpose. Are they still doing what they were intended to do? Is there any way in which they could be better targeted?

The problem with the approach that was taken in the past, where you looked at the whole business rates system, for example, the whole domestic rates system or the rating system in its entirety, is that policies continued to be left behind and were never subjected to any sort of a review cycle. We want to make the best use of any resource that we have and any support spend that the Department undertakes.

The Chairperson (Mr O'Toole): My understanding — correct me if I am wrong — is that the desired outcome, or the aimed-at outcome, is a refinement of the way that the rating system works rather than a substantive policy intent to raise revenue or massively reduce the burden on one particular area of business. You might look at our rating system and think that the two obvious things that we have talked about since we have come back are, one, raising substantially more revenue to help to invest in public services, and, two, easing the rates burden on one specific area of small business — hospitality — because we have made the judgement that we, basically, levy too much tax and there is competition, particularly if it is a Derry establishment near Donegal, given the lower VAT burden there. It does not sound as though there is a specific policy intent along the lines of either of those at the minute. Maybe there will be in the future, but not at the minute.

Mr McAvoy: In her statement, the Minister talked about the three levers that she wants to use in the work that is going forward, one of which is tax-based growth. There are two outcomes to taking a tax-based growth approach. The first is that you increase the amount of revenue that is created through the system, and if you grow it to a sufficient extent, you can start to lower the burden on the ratepayers who are in the system at the moment. That answers the bit about the revenue-increase angle.

The Chairperson (Mr O'Toole): It does not answer it; it is just one answer to it. That does not shape it.

Mr McAvoy: It does not. It is not the comprehensive answer to everything to do with increasing revenue, but that is where we are coming from with regard to using the rating system to increase revenue.

The second lever is looking at the support that is provided in the system currently. One would want to look at reprofiling it and making sure that it is targeted towards the right people. If that results in savings, it could, potentially, increase the revenue, or the decision might be taken by the Executive to recycle that money and target it towards other people in the rating system. Again, it depends on the outworkings of the decision.

The third lever through which she wants to progress her strategic approach to rating is the administration of the system, which is about making sure that the right support goes to the right people at the right time and that, if people are entitled to support, the uptake is implemented. Again, the converse of that is that if a charitable exemption, for example, is provided on a property, that should be monitored and reviewed to make sure that it is taken off as well.

The Chairperson (Mr O'Toole): Andrew, you always give us very comprehensive and informative evidence, but you just described levers. There is no indication that she will pull any of those levers or when she might decide the pull those levers. It is a bit like me saying, "I have a car in front of me that has an accelerator, a steering wheel and a gearstick". That does not mean that I will use any of them; I am describing the vehicle that I am driving. There is no indication that she will make any of those decisions or when she might do so.

Mr McAvoy: To follow through on your analogy, she has built the car.

The Chairperson (Mr O'Toole): Surely the car was already there.

Mr McAvoy: She has built the vehicle in terms of how she is going to approach the system, but, as we laid out the last time we were here, the level and degree of the decision-making that is taken on board is largely outside the Minister's hands. It is an Executive decision.

The Chairperson (Mr O'Toole): She is in the Executive. I would not say that that is fair. She is in the Executive; she is not in the Civil Service.

Mr McAvoy: I am referring to her taking decisions in isolation. Making any change to the rating system needs Executive support.

The Chairperson (Mr O'Toole): Fair enough, but that is true of most —

Mr McAvoy: It is statutory changes.

The Chairperson (Mr O'Toole): She has already said that she is minded to change the domestic cap.

Mr McAvoy: But only after consultation, yes.

The Chairperson (Mr O'Toole): Lots of people reported that that was going to happen, but the current position is only that a Minister has indicated that, at some point in the future, it may come to the Executive.

Mr McAvoy: Yes. It is [Inaudible.]

The Chairperson (Mr O'Toole): It is not a criticism of you, Andrew, but I still do not have any particular clarity on when we will have any major decision on rating policy other than the regional rates order that we have in front of us.

I will bring others in.

Ms Forsythe: Thank you, Andrew, for being back with us today. The Finance Minister has brought forward proposals to increase rates by 5% for households and 3% for businesses. Were those numbers consulted on?

Mr McAvoy: No consultation is undertaken in relation to regional rate increases. They are set on the basis of expenditure need. That being said, on the non-domestic side of the equation, since the Chancellor's autumn statement, which is outside the control of our Department, there have been sustained and significant representations from the business sector about the impact that that has had on the sector, which is why there is a variation between the two levels of uplift.

Ms Forsythe: The business sector's feedback is the reason why the business increase is lower than the household increase, yes?

Mr McAvoy: Yes, that is why it is lower.

Ms Forsythe: Were any other options considered for the percentage increases to be applied?

Mr McAvoy: Again, I am not sighted on the full range. I have not been involved in the Budget sustainability work, but I can only assume that a range of different uplifts was considered.

Ms Forsythe: It would be interesting to know every increase that was considered, because, obviously, this one is just the one set in front of us.

You said that this increase is expected to drive £42·6 million in additional revenue. Is that assuming a 100% collection rate?

Mr McAvoy: Any regional rate increase will always assume that. The way that it works is that, when the district councils and the Executive set the poundages, the income that is forecast on that is treated as though it is in the bank account at that point. For example, it is only at the end of the process that, if money has not been collected or has to be written off, it scores against that and comes off. It is assumed as being in the accounts and available to spend, yes.

Ms Forsythe: This year, they are talking about 93% collection, and, if we apply that figure, that would take it down to a potential £39·6 million in extra revenue raised, if the increase were in place. I know that you are here to talk about the policy and rates, but it would be remiss not to mention the fact that we have £115 million of prior-year uncollected rates debt as at the end of December. Has there been any assessment of the levels of affordability on this? I am quite concerned that we have had a rates freeze for a number of years. Last year, we had a 4% increase, and now we have a further increase of 5% for households and 3% for businesses. Given that you already have a high level of uncollected prior-year debt, has there been an assessment of the affordability of this increase?

Mr McAvoy: I know that the affordability considerations are not easy decisions to make. There is, obviously, the affordability on the one hand, which is critical, and, on the other hand, there are considerations around needing to raise money through the annual tax. With regard to affordability, on the domestic side of the rating system, there are significant mitigations that apply, such as the low income rate relief, the rate rebate scheme and the housing benefit for rates. People who are not entitled to those are exposed to the uplift in full, but there are safeguards within the system for those who have issues with payment. On the business rates side, 70% of all business occupiers get some form of support through the system at the moment — 75% if you include the vacant rating within that.

Ms Forsythe: Thank you. I am just concerned about the increase for the squeezed middle, as always. You cite a lot of reliefs, but, for those who fall short of getting any reliefs because they just fall short of the benefit system, I am really concerned that the affordability is going to hit.

As a representative of a rural constituency, I very much welcome the exemption for rural ATMs, as well as the Back in Business scheme. Again, it is really good to see that the effort is being put in and that there is regional balance. I have put some questions to the Minister on that and really welcome its being rolled forward. I will be keen to hear about the other SRs because I have a couple of questions on those, but we will come to those.

The Chairperson (Mr O'Toole): Yes, we will come to the other SRs later on.

Miss Brogan: Andrew, thank you for your briefing. I have a couple of quick questions on the SL1s and, as Diane just touched on, the Back in Business scheme. You outlined, in your opening remarks, the benefit that the scheme has had for businesses and, in fact, for neighbouring businesses as well. It is not just of benefit to those who make use of the scheme, the increased footfall is of benefit to others as well. Can you outline or identify any potential issues if we were to extend the SL1 so that the Back in Business scheme could continue for another year?

Mr McAvoy: Historically, as that type of scheme beds in and is in place for a time, people get to know about it, and the uptake lifts as word starts to spread among the business community that there are opportunities. That scheme has been in place for less than a year, as we speak, but some of the businesses that are up and running from it seem to be doing very well.

I have been keeping a keen eye on the footfall figures for the surrounding businesses, particularly around Belfast at Christmas. There is a mixed bag: Castle Court's footfall was up, but in some other parts of the city centre, it was down. It is part of our initiative within the rating system. There are limited things that you can do within the rating system. It is relatively crude for trying to incentivise activity and things like that, but this is the one that seems to work well. It has been copied in England, Scotland and Wales since we first introduced it here in 2011. It is working quite well, but I think it still needs time to bed in.

Miss Brogan: What has the uptake been like since May? Have you any figures, and have you noticed any trends across the North in different council areas? Is there any disparity among council areas or any areas where more businesses are getting the benefit? Have you any facts on that?

Mr McAvoy: We have had applications from all 11 councils. Awards have been made on nearly all of them, and, where there has not been an award, applications are pending in the system. The geographical spread is pretty good. As a result of the scheme, six new businesses have opened in Belfast, seven in Mid and East Antrim and six in Mid Ulster. We are trying to get round all the councils and push the promotion of the scheme once we get it renewed, if the Assembly agrees to it.

Miss Brogan: Are you liaising with councils to promote it? What exactly is the Department doing to promote the scheme?

Mr McAvoy: The Minister is visiting different business organisations. Just before Christmas, we were in Armagh City, Banbridge and Craigavon Borough Council, with its business partnership alliance, promoting the scheme through that. We have, more or less, hit every council now to meet them to try to boost the scheme. Where I am particularly keen to work on promotion of the scheme is to build on the model that we have with Belfast City Council. It has the Vacant to Vibrant scheme, which is a small grant scheme to support businesses with fit-outs and frontages. Where it has tried to couple with our scheme, it has said "If you are coming in to use the Vacant to Vibrant scheme to move into a new unit that has been unoccupied for 12 months or more, you will also be entitled to this", so there is a whole package for start-up businesses. After Christmas, we had discussions with DFC on that at official level. I think that we will try to promote that across the two Departments. We will write to the Minister on that soon.

Miss Brogan: Finally, the rates exemption for ATMs in rural areas is very welcome. As a representative of a rural area, I will happily support the extension of that. Can anything else be done on the rating system to help with access to cash, particularly in rural areas?

Mr McAvoy: At the moment, the small business rate relief scheme already has an enhanced bracket for post offices. Post offices are key to access to cash. They provide many cash services. An enhanced version of the small business rate relief scheme already applies to post offices. That element of the SBRR scheme will be looked at in the forthcoming review, which is planned to start in 2025-26. We will look at that to see how it is targeted and whether anything more can be done in that space. I met the National Federation of SubPostmasters, which made representations in that space following the return of the Executive. The Minister has been doing quite a lot of work on access to cash. We will want to examine that within the small business rate review that is coming up. That will be the next port of call in trying to promote that end of things through the rating system.

Mr Carroll: Thanks, Andrew. Can you remind me how much the Back in Business scheme is in total, please, just so that I have it at hand?

Mr McAvoy: Do you mean the cost of the scheme —

Mr Carroll: Yes.

Mr McAvoy: — or the amount to recipients? Well, the cost of the scheme is notional. Evidence shows that the odds of a property's becoming occupied again after it has been vacant for 12 months or more diminish the longer that it sits empty, so that is treated as notional cost. The amount that has been awarded to the current cohort of 29 recipients is £43,000. It applies to smallish properties at the moment.

Mr Carroll: Is that the total for the whole scheme?

Mr McAvoy: That is the total spend to date, yes.

Mr Carroll: I assumed that it was greater, but OK.

On a connected issue, the Minister said in her

strategic road back — sorry, strategic roadmap statement —.

The Chairperson (Mr O'Toole): Coffee is available in Andersonstown.

Mr Carroll: It does not roll off the tongue. She said:

You have mentioned words to that effect.

I am curious about housing as well, because it is a social question that many of us are inundated about. I have a Member's Bill (MB) that looks at aspects of housing. It is also a form of income through rates. My understanding is that there is a distinction between vacant and derelict properties. I am not sure whether that is your area or whether you are familiar with it. If it is, maybe you can speak to that.

Also, is any work being done to try to ensure that penalties are put in place? I obviously support the small business rate relief scheme, but I am less supportive of industrial derating for big businesses. What are LPS and the Minister looking at — penalties, fines or revenue raising — as regards empty properties and anything to encourage people to come forward and declare whether the property that they own is vacant or derelict?

Mr McAvoy: There are a couple of things on that. The rating of empty homes was brought into operation in the rating system in October 2011, building on the Semple review of affordable housing. That work was undertaken at the time of the last housing boom, which created a similar situation to what you are talking about in that there was a squeeze on housing demand in contrast with supply. At that point, Sir John Semple said, "To try to address the issue, we want to bring in the rating of empty homes" — which was not in place here — "and it needs to come in at the level of 100%". Previously, you could have left a property empty and not paid any rates on it. The 100% charge is meant to act as an incentive to bring those properties back into use rather than have them sitting empty.

As for what we can do to increase supply, I had a meeting a couple of weeks ago with Belfast City Council and Dublin City Council about how we can take vacant non-domestic stock, including commercial properties and units above shops, and try to repurpose that for residential use and explore what can be done through the rating system to try to do that. Belfast City Council is surveying all the owners of the properties in Royal Avenue and Donegall Place as part of its evidence gathering.

On derelict versus rateable properties, the rating system deals with properties that can be occupied and are deemed to be capable of occupation. At the moment, derelict properties sit outside the remit of the tax, so it is a separate tax system. There was an Assembly debate about that prior to Christmas that may give a bit more detail, but I can provide that to the member if that would be helpful.

The Chairperson (Mr O'Toole): Is that OK?

Mr Carroll: Thanks. Sorry. My connection froze a wee bit. Apologies to the Committee.

Andrew, I would appreciate it if you could provide an update on those meetings with Belfast City Council and Dublin City Council.

Mr McAvoy: No problem.

Mr Carroll: I have two final questions. Could the 100% rating of a vacant property be increased to, for talk's sake, 150% or 200% to, effectively, introduce a charge on empty properties?

I have submitted Assembly questions on my next point. I am looking for a bit of clarity on this because I am unsure about it. If rates are paid on a property, it is presumed that it is not vacant, but a landlord could be paying the rates even if nobody is in the property, if that makes sense. Is that the case, or is it more complex?

Mr McAvoy: On the 100% charge, at the moment, we do not have those powers in the legislation, but Wales has gone out in front and trialled charging more than 100%. I am keeping a tight eye on that to see how it is going. There were concerns about the impact that it might have on the property market in Wales. My concern is more that, if the charge were increased beyond 100%, people would just tell you that the property is occupied. That is the difficulty. I would like to let the Welsh scheme bed in before we create a problem for ourselves with a tax that we cannot fully collect.

On payment of rates, yes, some landlords will assume responsibility for a property and not declare a vacancy. However, if you are in the landlord sector, your business model dictates that you want a property to be occupied as quickly as possible. Because the rating charge is 100% for empty properties, people will just continue to pay the rates on it and may not notify LPS. It is difficult for us to determine between those two, because —

Mr Carroll: That is very helpful. Thanks for that, Andrew.

Mr Brett: Andrew, thank you, as always. I have two quick questions. In the legislation on rates exemption for rural ATMs, how is "rural" defined?

Mr McAvoy: The definition is laid out in statute in the Rates (Automatic Telling Machines) (Designation of Rural Areas) Order (Northern Ireland) 2016. You can have this copy. Effectively, it was put in place after the review of local government changed the wards.

Mr Brett: If you are in those wards, you —

Mr McAvoy: Yes. Those wards are designated in statute as rural, and that is what determines it.

Mr Brett: OK. Since May 2024, 22 businesses have benefited from the Back in Business scheme.

Mr McAvoy: That was in the SL1, but it is actually 29 businesses now. We got the latest data just before I came to the Committee today.

Mr Brett: Very good. How many are pending in the system?

Mr McAvoy: There are 13 applications pending in the system.

Mr Brett: If this SR is agreed by the Committee, it will be in operation for a full year. Hopefully, that will give the Department and stakeholders the opportunity to —.

Mr McAvoy: It gives a bit of continuity to the scheme.

Mr Brett: Perfect. Thank you for your answers on both of those.

The Chairperson (Mr O'Toole): You touched on this, Andrew, but I would like to clarify it for the purposes of the record and my understanding. We had evidence last week from representatives of Retail NI, including Chris O'Reilly, a postmaster who has a retail business. One of their arguments was that all ATMs should be rate-exempt, given the commercial pressures facing the small businesses that host them. Is that under active consideration?

Mr McAvoy: It is not under active consideration per se. It could be encompassed within the small business rate relief scheme review.

The Chairperson (Mr O'Toole): Remind us: is there a point when that could happen?

Mr McAvoy: After the Supreme Court decision, most ATMs are now not rated, but there are only 180 that are valued separately.

The Chairperson (Mr O'Toole): There are only 180 ATMs in Northern Ireland that are valued separately.

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): Of which, some will already be rate-exempt.

Mr McAvoy: Yes, because of the rural ATM exemption. The number of properties is not massive in scope, so that could be captured in the small business rate relief scheme review.

The Chairperson (Mr O'Toole): When will that report?

Mr McAvoy: When will the small business rate relief scheme review report? It will start at the beginning of the 2025-26 year. We want the majority of the process to be wrapped up prior to the summer recess, because, as we know and as you will appreciate having been through the cycle, when you hit the autumn, there is not that much time left to bring in legislation or changes for the following April.

The Chairperson (Mr O'Toole): I do not want to speak presumptively for others, but I think that it is something that the Committee —. There are a number of things. The first is the importance of ATMs. The rural ATM scheme is perfectly welcome, but several Committee members represent urban constituencies, where this also matters. Chris O'Reilly gave the example of the Ormeau Road. There is the financial exclusion question, but there is also the fact that people might want to go for a pint in the Pavilion Bar or the Errigle Inn but spend no more than £20 and, therefore, decide that they will not bother, which means lost trade. By the way, other brilliant pubs are available in South Belfast.

It sounds as though you are saying that there would not be a huge cost to the Executive. From my perspective, it is the kind of thing that we would like to be expedited. If, in that time, given the pressures that Chris O'Reilly talked about, operators do what he has done, which is literally to pull the plug, ATMs might end up being deinstalled and therefore lost to those environments. The sooner that we hear about that, the better.

Mr McAvoy: OK.

The Chairperson (Mr O'Toole): We would appreciate being kept in touch. Given that some of this is more discrete, that change would, presumably, be made through secondary legislation.

Mr McAvoy: Yes. We cannot do that through this SR because the enabling power is for rural ATMs in designated wards. However, the small business rate relief scheme has enough scope to allow us to provide relief for other areas if that is desirable.

The Chairperson (Mr O'Toole): OK. That could not be done for the coming financial year, could it? It would be too tight —

Mr McAvoy: No.

The Chairperson (Mr O'Toole): — but it could be done for 2026-27. I am not asking you to make promises. You cannot make the policy commitment. That is not for you.

Mr McAvoy: I have just come from a meeting with the hospitality sector. I tried to explain that we are no longer in the COVID era, when we moved such things through so quickly. Any change to the rating system requires statutory change and therefore consultation.

The Chairperson (Mr O'Toole): Indeed.

Mr McAvoy: Even if it is a small change.

The Chairperson (Mr O'Toole): Even an early indication that the Minister is minded to make it happen might help ATM operators such as Chris O'Reilly's business.

Mr McAvoy: Out of the review will come quick wins and things that will take longer.

The Chairperson (Mr O'Toole): If we leave it for a year, operators might decide, "It is not worth my while commercially, so I will just switch the thing off or get it removed".

Mr Brett: Does the Department hold information on the average rates liability of a stand-alone ATM?

Mr McAvoy: I do not know off the top of my head, but I can get answer that for you.

Mr Brett: ATMs in shops, garages and those sorts of places do not carry a separate charge, is that right?

Mr McAvoy: Only where there is a stand-alone ATM is it valued separately.

The Chairperson (Mr O'Toole): When it is in a shop, it is —.

Mr McAvoy: It is valued as part of the shop.

Mr Frew: I thank Andrew for his presentation. The Back in Business scheme is good. I was involved in helping a couple of businesses in my constituency through it, and I educated myself. I appreciate the LPS office in Ballymena, which walked the businesses through it. That proves to me that it works.

I have a quick query. The SR is a yearly process, even for the Back in Business scheme. When was that passed last year?

Mr McAvoy: It came into operation in May last year. The Executive had just come back, so there was a long list of things that needed to be done.

Mr Frew: I noted the other two — regional rates and the exemption for automatic telling machines — but my concentration must have lapsed so that I did not list that one. When that one came in was puzzling me because the three were not packaged together last year.

Mr McAvoy: The Back in Business SR and the rural ATMs SR were taken through separately. The regional rate SR had to be made immediately after Executive agreement on 29 February.

Mr Frew: On the wider 10-year review of rate relief, has the Department ever thought about allowing relief for homes or buildings that bear the burden of meeting historic environment division (HED) requirements?

Mr McAvoy: If a property becomes empty that falls within that cohort, as a listed building or a historic monument, it is excluded from the vacant rating charge.

Mr Frew: It does not have that burden.

Mr McAvoy: As long as it is vacant.

Mr Frew: Given the fact that a lot of those large homes, which are an asset to the cultural identity of the country, have that burden and are quite inefficient as properties — you cannot have double glazing, you have to watch what central heating you put in and the HED will dictate what you can renovate and what you cannot — running costs to keep the building habitable are sky-high. Is there any thought process in the Department about allowing a new specific relief for those types of buildings?

Mr McAvoy: There is no enabling power in the rating legislation that would permit that at the moment, so you would be talking about a primary legislative change there.

Mr Frew: Right, OK.

Mr McAvoy: Where they are listed and unoccupied, it is for the reasons that you have noted, both on the domestic and non-domestic side of the tax basis. They are excluded from the charge, because they are not properties that you can necessarily bring back into use as quickly as others. You have to have specific works done to them: maybe the stone masonry needs to be consistent. You cannot say, "All you need to do is refit that and get it into occupation". There are rules and regulations around that kind of thing that mean that you cannot do that as easily for those properties.

Mr Frew: Some, of course, are used and have revenue streams: wedding venues and stuff like that. There are prospects of revenue, yet there is still that business case as to the maintenance of the building.

Mr McAvoy: Where such buildings are being used for that purpose, they would probably fall on the non-domestic side of things.

Mr Frew: Of course. There has been no thought process about domestic and non-domestic; both would require legislation.

Mr McAvoy: Not outside that consideration, where they are vacant and where we appreciate that you cannot just repair them with the same speed as other properties.

Mr Frew: Is their value based just on the buildings? Does it take into consideration the land?

Mr McAvoy: How it is valued will take into consideration the location of the property and assume an average state of repair.

Mr Frew: OK. Thank you.

The Chairperson (Mr O'Toole): No other members have indicated that they wish to ask questions.

Andrew, you want to touch on a couple of additional pieces to give us a flavour of those.

Mr McAvoy: Yes. The small business rate relief scheme SR is a negative resolution SR. It did not need to be debated in the Assembly, but we got it to you first because it is an important one. The three that we talked about today require debate, so they were batched together. The next three are SL1 letters relating to negative resolution SRs, but they are really just to maintain and upkeep the legislation, so there is nothing too controversial in here.

The first one on the list is the valuation statutory rule. Two small telecoms operators have entered the market. Because of the way that they are valued, they are specified in the legislation, so we are just adding them to the list of those that can be valued and getting them into the rating base. The second one, the social sector standardisation statutory rule, is to do with changes in the name or where two housing associations have amalgamated. They are prescribed on a list in the subordinate legislation, and that list just needs to be updated. The third one covers where there have been changes to the social security legislation that underpins our low-income rate relief scheme. Again, because our legislation sits on top of theirs, as they change theirs, we need to change ours. It is just a consequential change to our legislation to account for that and the roll-out of universal credit (UC) as it keeps going.

Those three are negative resolution SRs. We have a bit more time, because they do not need a debate, but I thought that, while I am here, I will have a chat with you about them. I will come back if there is anything specific on them that you want to discuss.

The Chairperson (Mr O'Toole): OK. That is helpful. They are all negative resolution SRs. Give us a little more detail, for the purposes of our doing due diligence. Those are specific telecoms companies that have entered the market here that require —

Mr McAvoy: Yes. They are two new operators in the north-west. They are fairly small in scale.

The Chairperson (Mr O'Toole): Are they broadband providers?

Mr McAvoy: I know that people think of the rating system as rating only property, but it actually rates all the cables and everything underneath the ground belonging to telecoms operators. It is called "unbundling" the old BT network. If another supplier takes it on, all that apparatus is valued. This legislation allows us to value that as one hereditament rather than as lots of individual component pieces of its infrastructure.

The Chairperson (Mr O'Toole): Presumably, there are already comparators in the rating system here that are rated and billed.

Mr McAvoy: Oh, yes. This is just adding them to a list of existing comms providers.

The Chairperson (Mr O'Toole): OK, fair enough. This is important for Committee business planning: when will we get those statutory rules?

Mr McAvoy: Those ones are next on my list to send.

The Chairperson (Mr O'Toole): Will it be in the next few weeks then?

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): Excellent.

I want to go back to the assumption on the regional rate, which you say is assumed and is mentioned in the draft Budget statement. We await Executive agreement, assuming that the Executive will be agreed on it, and we will discuss it in the Committee. It is a 5% increase for domestic, which, as you say, is 60p a week for the average property.

Mr McAvoy: I was doing that off the top of my head. If it is different, I will let you know.

The Chairperson (Mr O'Toole): That, I think, is the amount that is quoted in the Budget statement.

Mr McAvoy: Yes, I think that it is.

The Chairperson (Mr O'Toole): For the purposes of clarity, that becomes a function, largely, in policy terms, of the Department deciding where the regional rate income should be in order to deliver the Budget for the next year. It is not decided in isolation. Is that fair?

Mr McAvoy: It is an integral part of the Budget consideration. That is why we, in rating policy, do not get a say on it.

The Chairperson (Mr O'Toole): That is what I mean. You are not going and saying, "I think it should be this". It is a policy decision that comes from —.

Mr McAvoy: No. We are acutely aware of the situation facing businesses, so we will feed in to say, "Look, there are limits to what you can do here".

The Chairperson (Mr O'Toole): Yes; to what you can do to business. That is particularly the case when they are not getting much support elsewhere. In percentage point terms, it is a 5% increase on domestic and a 3% increase on non-domestic. What was it in 2024-25?

Mr McAvoy: It was 4% on both. That was the rate of inflation at the time though.

The Chairperson (Mr O'Toole): That was with inflation at the time.

Mr McAvoy: That was the rate of inflation — the consumer price index (CPI) — at the time of the Budget

The Chairperson (Mr O'Toole): That was the rate of inflation. Was it the consumer price index or the retail price index (RPI)? I suppose that they were both about that.

Mr McAvoy: It was CPI.

The Chairperson (Mr O'Toole): CPI is significantly lower now. When the CPI indexes certain taxes and benefits, it tends to use a specific month, such as September. Is that a calculation that you use?

Mr McAvoy: No. That is a feature of the system in England. It is in statute that it has to use the previous September's inflationary index.

The Chairperson (Mr O'Toole): I think that the most recent is —.

Mr McAvoy: It was 2·5% in December.

The Chairperson (Mr O'Toole): Therefore, the domestic increase is double the rate of inflation.

Mr McAvoy: Yes. As I said, it is tied in with the Budget sustainability plans and everything for the Executive.

The Chairperson (Mr O'Toole): Do you remember what it was in 2023-24? That would have been prior to there being an Executive. I think that that was a below-inflation increase set by Chris Heaton-Harris.

Mr McAvoy: I cannot remember, but I do know that, when we were exiting the COVID period, it was very carefully managed.

The Chairperson (Mr O'Toole): It would be helpful for us to clarify, on the record, that it is the highest in real terms for at least few years —

Mr McAvoy: I think that it is.

The Chairperson (Mr O'Toole): — because it is double the current rate of inflation.

Mr McAvoy: I was here when Peter Hain put it up by 16% or something like that. To provide context, although I am straying out of my area: in England, the council tax increases are 5%, which is a 3% uplift, and the health and social care bit is bringing those up to 5%; in Wales, council tax increases are going well beyond 5% in some areas.

The Chairperson (Mr O'Toole): It is worth putting that on the record, so that the Committee is doing its job in clarifying where things are relative to inflation. It is the first significant real-terms increase in a while, and it is double the rate of inflation marked against where we are now. Thank you for that; I just wanted to get it on the record.

Andrew, that was really fulsome. No members appear to have other questions. That was most helpful. Thank you, Andrew.

Mr McAvoy: Thank you for accommodating me. I was due to be here earlier, but I had a meeting with the hospitality sector. Thank you. All the best.

The Chairperson (Mr O'Toole): Members, we now need to go through the proposed SRs. All three are subject to affirmative resolution procedure and will be voted on in the Assembly. We will see whether there appears to be consensus on the proposed SRs. I do not think that we requested specific follow-up information. I think that we clarified quite a bit. There is nothing specific to the SRs that are in front of us. I will take each SR in turn.

I ask members if they are content with the proposed statutory rule, which will set out in legislation the amount of the domestic and non-domestic regional rates for the year ending 31 March 2026, or whether anyone requires further information or wishes to comment. Are members content?

I will take off my Chair's and say that I will not support the increase. I register that outwith my capacity as Chair. However, I think that members have indicated that there is agreement, so we can indicate that for the record.

Dr Aiken: For clarification, Chair: are you voting against it?

The Chairperson (Mr O'Toole): Yes.

Dr Aiken: OK, that is fine. We have to formally vote then, do we not? I think that Gerry will probably do the same as you.

The Chairperson (Mr O'Toole): We do not necessarily need to record a vote, but we can indicate that the Committee is —.

The Committee Clerk: This is SL1, Chair. It is at the policy stage.

The Chairperson (Mr O'Toole): You will get to record a vote on the Floor of the Assembly, so we do not have to vote today.

The Committee Clerk: It is about seeing whether there is consensus.

The Chairperson (Mr O'Toole): And there is. Gerry Carroll wishes to come in. I was just indicating my intent for the record. I invite anyone else who wishes to record their intent or make a comment to do so.

Mr Carroll: Is it the rates increase that you indicated your opposition to?

The Chairperson (Mr O'Toole): Yes.

Mr Carroll: I wish to record my opposition as well. Thanks.

The Chairperson (Mr O'Toole): OK. Thank you, Gerry.

Dr Aiken: Apologies, Chair. For clarification, again: we have not had any confirmation yet that it has gone through.

The Chairperson (Mr O'Toole): The Department briefed us on the proposed assumed Rates (Regional Rates) Order 2025. It still requires formal Executive approval, but the Department has given us indicative numbers, and it is indicated in the draft Budget. We are not formally praying against it here. We are indicating.

Dr Aiken: There just seems to be a principle, which is happening in a couple of other Committees, where we are being asked to pre-approve things that have not yet been given Executive approval.

The Chairperson (Mr O'Toole): That is a question for the Executive. The Department or LPS are, at least, briefing us. We cannot complain about that process. However, there is a question about Executive approval, which is not one for me, obviously.

Dr Aiken: I have a particular concern, because I am seeing more of it. We see it on the Windsor Framework Democratic Scrutiny Committee, where we have been asked to pre-approve legislation that has not even come through yet. It is beginning to become a thing.

The Chairperson (Mr O'Toole): That is European legislation though, Steve. It is in perfect shape, I am sure. [Laughter.]

I should not make dismissive comments.

The Committee Clerk: To clarify, when the SR comes to the Committee, it will have to have that. There will be Executive approval then. It is subject to debate as well.

Dr Aiken: Have we got a timeline for it?

The Chairperson (Mr O'Toole): It will have to be soon, because it has to be ready in time for the next financial year. Members have indicated their broad views on it.

Next, I ask members whether they are content with the proposed statutory rule to reinstate a micropolicy within the rating system that applies a rate exemption to ATMs in a designated rural area or whether anyone requires further information or wishes to comment. Are members content?

The Chairperson (Mr O'Toole): I ask members whether they are content with the proposed statutory rule to continue the Back in Business scheme for the 2025-26 rating year or whether they require any further information. Are members content?

The Chairperson (Mr O'Toole): We have indicated our views on that.