Official Report: Minutes of Evidence

The Deputy Chairperson (Ms Forsythe): I welcome Sharon Gallagher, chief executive of Land and Property Services (LPS); Andrew McAvoy, director of rating policy division; and Gary Humphrey, deputy director of valuation, LPS, in the Department of Finance. Angela McGrath, director of valuation, was to attend, but that changed after the Committee papers were issued. I am pleased to have you all here. We wrote to you not that long ago, but it is good to see you all again. Sharon, I invite you or your colleagues to provide an opening statement. Thank you.

Ms Sharon Gallagher (Department of Finance): Thank you, Madam Chair and members. We appreciate the opportunity to brief the Committee today on the draft outcomes of Reval2026. I am joined by Andrew McAvoy, director of rating policy; and Gary Humphrey, deputy director of valuation, who leads the operational delivery of the non-domestic revaluation.

Revaluation is a normal, statutory process required by the Rates (Northern Ireland) Order 1977. It ensures that the rates system remains fair and up to date by redistributing rates in line with current rental values in the property market. Rates are a property-based tax, and a valuation known as the "net annual value" (NAV) is an estimate of rent at a fixed point in time: in this case, 1 April 2024. Businesses are currently paying rates on the basis of rental levels that reflect the economic and market conditions during the pandemic in October 2021. Reval2026 updates that position by using more up-to-date rental evidence from April 2024. The NAV is not the rates bill. It is the first component in a calculation that also depends on the regional rate and district rate poundages, which are not yet confirmed for the 2026-27 rating year.

The purpose of a revaluation is not to raise more money overall; revaluations are revenue-neutral. When the total value of the list changes, the rate poundages adjust downward or upward to ensure that the same amount of money is raised as before. What changes is the distribution of business rates, which is based on relative movements in rental value across sectors and locations.

Reval2026 is the fourth revaluation since 2015, reflecting calls from the business community for more frequent valuations. Northern Ireland is in line with the three-year revaluation cycle that now operates in England, Scotland and Wales. A central purpose of revaluation is to maintain fairness and equity across the rating system. By updating all valuations to the same point in time, the rates burden is redistributed in line with real movements in rental values, ensuring that sectors or ratepayer valuations are based on up-to-date assessments.

Reval is a large, evidence-based exercise that takes around two years to complete. This is the third Reval event that Gary has led, supported by a dedicated team of staff with the required competence, skills and knowledge. Collectively, they have issued 57,000 rent and lease questionnaires; collected and analysed tens of thousands of rental and trading returns; engaged extensively with business sector bodies and professional representatives; applied internationally recognised valuation methods, such as rental comparison, receipts and expenditure and the contractor's method of valuation, depending on the property type; and assessed all properties at the same valuation date to ensure equity and consistency.

The basis of value is the rental value at 1 April 2024, and LPS follows the market evidence from around that date to determine the values. That common valuation date ensures that all properties are assessed on the same basis, which supports fairness and consistency across the rating system.

Aligning net annual values with a modern rental market is particularly important, given the significant economic, sectoral and locational changes that have taken place since the previous revaluation. The draft valuation list was published on 22 January, and, while substantial work has been completed, values will continue to be refined before the list becomes statutory on 1 April 2026. The draft list shows that the overall NAV in Northern Ireland has risen by around 15% since Reval2023, which is broadly consistent with other UK Administrations over the same period. Importantly, around 42% of properties have either no change or a decrease in their NAV. Two thirds of properties are at or below the overall 15% increase, meaning that many ratepayers are likely to see little or no change to their rates bill once the poundages are set. That includes many high street shops in towns and villages. Movements vary by sector and council area, reflecting differences in local rental evidence, property mix and new properties being added to the list.

Some sectors are receiving particular attention, including hospitality. It is important to emphasise that the last valuation date, 1 October 2021, fell during COVID restrictions. Many pubs and hotels received temporary COVID allowances to reflect suppressed trading. The allowances were never intended to be permanent; they could remain only if the business evidenced that it was still trading at COVID-era levels in 2024. No such evidence was provided, so those temporary abatements, which had been in place since 2023, have now been removed. That will, of course, have an impact on the percentage increase in the NAV experienced by impacted businesses, where increases in rental value are no longer ameliorated by COVID reliefs. It is also important to note that LPS must value each property as it stands at the valuation date. COVID-era allowances were temporary measures that reflected abnormal trading conditions, and it would be unfair to other ratepayers if those discounted rates were carried forward once businesses had returned to normal levels of trade. The removal of those temporary adjustments is therefore a necessary part of restoring fairness and consistency across the valuation list.

The draft list is not your bill. It is an important opportunity for businesses to check their draft valuation, understand how it was derived, provide further information where necessary and, of course, engage with LPS officials to ensure that the values are finalised accurately. We actively encourage businesses to review their valuations now. If a ratepayer believes that their NAV is inaccurate, or if they have additional rental or trading evidence, they can contact LPS directly through our online system. Valuations can be reviewed and, where appropriate, amended until the new list takes effect.

As with previous revaluations, LPS has placed a strong emphasis on early and ongoing engagement. We have worked closely with councils, business representative groups and key stakeholders throughout the preparation of this revaluation. Over the coming weeks, we will commence a Revaluation 2026 roadshow, similar to what happened in previous years: a programme of public information events, delivered in partnership with local chambers of commerce. Sessions will be held in every council area, providing ratepayers with accessible advice on how the revaluation process works, how to interpret their draft NAV and how to contact us if they wish to discuss it or to provide further evidence. The roadshow is designed to ensure that businesses have the support that they need during this stage of the process.

Members are probably keen to hear about rating policy support, so I will touch on that briefly. The Minister has recognised the pressures facing certain sectors, and he signalled in his statement in the Assembly on 18 November the need to explore additional support measures. The Department has been consulting on changes to the small business rate relief (SBRR) scheme since early December. That scheme supports about 30,000 businesses, and the consultation has sought views on increasing support by raising reliefs and the scheme's upper valuation threshold. In that context, importantly, the Minister's draft Budget proposals set aside £10 million for business rate support in 2026-27.

Members will be aware that the Chancellor announced a package of support for pubs yesterday, demonstrating that Administrations across these islands are grappling with similar challenges. We will brief the Minister on that Westminster intervention, how it interacts with our different rating system and how it aligns with the early findings of our consultation on SBRR.

I stress that the public consultation on business rate support does not close until tomorrow, so it would not be appropriate to prejudge its outcomes. As always, the responses will be assessed in an evidence-based manner. The Minister has made it clear, however, that the need to consider support was identified through the work undertaken by Land and Property Services over the summer. Ultimately, any decisions on the scope, form or scale of support will be political decisions for the Minister and the Executive. Minister O'Dowd's stated aim remains to deliver any agreed support by April 2026.

I emphasise that having to legislate for targeted relief is not the obstacle; that has previously been done rapidly. The key issues are funding, scope, fairness and a clear policy rationale. Those considerations cannot be resolved until the broader multi-year Budget position is settled, and that sits beyond the remit of Land and Property Services.

That is a brief overview of where the project stands, the key outcomes emerging from the draft list and the steps that we are taking to support ratepayers through this phase. My team and I are acutely aware that some owners are extremely concerned as they consider the potential impacts on their business. I assure the Committee that we are here to support those who are impacted. If business owners are concerned, they should contact LPS through the dedicated online Reval portal. As a first and most important step, we will ensure that your assessment is correct, taking all relevant information into account. The Reval marks the start of the process of rate-setting, and we are keen to continue to support businesses throughout.

Chair, that is all that I want to say at this point. I appreciate that the opening remarks were longer than normal, but I wanted to give you a full feel for where we are.

The Deputy Chairperson (Ms Forsythe): Thank you very much, Sharon, for those comprehensive remarks. We, as a Committee, have worked with you and your LPS team, and we know that you operate to high standards. I have no doubt that you followed all the policies and procedures as you conducted the revaluation process.

You mentioned political decisions. Will you confirm that the Minister could instruct the revaluation process not to proceed, if he chose to?

Ms Gallagher: There would be certain considerations. Clearly, we would work with whatever decision our Minister chose to make, but there would be certain implications and considerations, including the impact that setting it aside would have on future Revals or rate-setting. There are undoubtedly some major considerations for some stakeholders, but many stakeholders will benefit from it. A decision to pause or stop the Reval process would be a considerable one; its consequences and implications would need to be carefully thought through.

The Deputy Chairperson (Ms Forsythe): You have presented the academic numbers, but the Minister has the power to pause the process, if he so chooses.

Ms Gallagher: The Minister's decision will be at his discretion. Clearly, we would need to give him advice about the implications of pausing, but that decision has not been made at this point. We are still actively finalising a process. We are engaging with stakeholders and working with them to understand what the significant issues are and how we might help them to step them through.

Importantly, we have — this was mentioned earlier in the week — an engagement rate of about 50% across the piece and a rate of around 30% for hospitality. It is important that anyone with concerns reach out to the team and provide the information so that we can make a proper and informed assessment.

The Deputy Chairperson (Ms Forsythe): Ultimately, it is the Minister's decision. If he were to instruct it not to proceed, that would be the case.

Ms Gallagher: From my perspective, LPS has followed a process. We will come to a point of completing a process that provides a basis for the fair distribution of rates.

The Deputy Chairperson (Ms Forsythe): But it is then for the Minister to decide whether he takes that forward.

Ms Gallagher: Those decisions are outside of my control. The decision to run Reval was made some time ago; it has been in gestation for over two years. Considerable time and effort has been spent to get to this point. Ultimately, we are in a three-year cycle. I mentioned the number of Revals that we have done. It is something that the business community asked us to do. We are in line with all other jurisdictions when it comes to methodology, policy and approach. We in LPS have completed an open, transparent and fair position on which rating can be set.

The Deputy Chairperson (Ms Forsythe): LPS has followed all of the procedures, so it is now a political decision.

Ms Gallagher: Indeed.

The Deputy Chairperson (Ms Forsythe): When it came through and the acute rises facing the hospitality sector became apparent, did the Minister raise any concerns?

Ms Gallagher: We are still in a process. The Minister published in January, in line with previous practice, to allow engagement to happen. We see that as positive. We see our coming to you today and having the opportunity to speak to stakeholders as positive. We want to understand the impacts. We want people to come to us with the information. Ultimately, we want to ensure that the process is fair. The methodology is tried and tested and is used across England, Scotland, Wales and here. We need the information to ensure that valuations are correct, and, until we are in that position, the full implications will not be known, because we have not yet finalised the list. The more opportunity that we have to speak to people — to you, as political reps, to businesses and to stakeholders — the better the process will conclude in terms of the action of LPS, which is to carry out a revaluation at a point in time that calibrates the burden of paying rates across businesses on the basis of market forces at that time.

The Deputy Chairperson (Ms Forsythe): For those of us who come to the matter not as valuers or professionals in the field, it seems unusual to take an organisation's turnover rather than its profit. I understand that that is what other jurisdictions do, but Scotland and England are reviewing that process. Is the process under review in Northern Ireland? You mentioned the questionnaire's low response rate and the need to encourage people to engage. Does that low response rate mean that the valuation is fundamentally flawed?

Ms Gallagher: No, not at all. In previous revaluations, we have consistently had a low response rate. I will ask Gary to come in to speak to the three different methodological approaches that we use, why we use them and the considerations elsewhere.

I assure you, Deputy Chair and Committee, that we continue to have positive and constructive engagements with businesses and their representatives on our approach, our methodologies and the best way to undertake the assessment. It is not in our interest to be unfair; it is in our interest to be open and transparent. For example, this year, the new portal has maps that allow anyone to look at any valuation. We want to be transparent.

Where people believe that we have used incorrect or flawed information, we ask that they provide that information. Stakeholders' representatives are encouraging their members to participate in the process and provide information. That is not yet at a level that we would think —. There is still a way to go. I do not believe that the valuation is flawed, but if people are concerned about their revaluation, they need to come to us, provide the information and have the conversation with us, because we are ready to talk.

I am happy to bring Gary in to explain the different methodologies and why we use them, if that would be helpful.

Mr Gary Humphrey (Department of Finance): I will try to keep it brief. We use three valuation methods to try to replicate a rental value at a fixed point in time. That is why we go out to industry and the market to get as much information as we can. We send out rent and lease questionnaires. We issued around 57,000 questionnaires, and we got a 50% response rate, which, given the context of property tax, is not bad. We are trying to get as much information as possible. Really, we are replicating how the market works in order to assess rental value.

There are three main methods. There is the comparable, or rental, method. We use that for our bulk properties, such as shops and offices. It is our preferred approach. We use it when there is enough rental information.

The receipts and expenditure method is used for pubs, hospitality venues, hotels and cinemas. We use it because, in the rental market, the rent that someone pays for a property is influenced by the ability of that property to generate a turnover. If you can generate more turnover, you can pay more rent. That approach follows the market.

We also have the contractors' method. It is for properties that are never let. This Building is an example of such a property. We try to estimate how much it would cost to replace the property, and we adjust that estimate for the age, obsolescence and what we call "superfluity" or a surplus. That is multiplied by a statutory decapitalisation rate — I am conscious that this is becoming a bit technical — to convert the capital value to a rental value.

Those are the three main methods that we use to replicate the market.

The Deputy Chairperson (Ms Forsythe): Other jurisdictions are reviewing that. Is it under review in Northern Ireland?

Mr Humphrey: We are waiting to see what the outcome is. I sit on a couple of harmonisation groups, and we are in communication about that. We await the outcome.

Mr Andrew McAvoy (Department of Finance): The Minister said in his statement in November that he will take into account what happens in Scotland and England. Yesterday, the Chancellor said that the Government would look at the methodology. That process and what Gary does in the harmonisation groups will all feed into the process for the next time.

Ms Gallagher: Gary was being modest when he said that we are waiting to see what happens in other jurisdictions. Gary and others are fully involved in those conversations. We bring to that table any information or evidence that stakeholders give us.

We sit at that table, and we will inform those decisions and brief the Minister. That goes back to the point about making sure that the information is available and that we maintain positive, open relationships with stakeholders.

You asked me whether I believe that the revaluation is fair. The outworkings may feel unfair to certain people, who have very high increases, but the responsibility of the Reval is to create fairness across all businesses — fairness across the system. It is important that that message comes across, today. That is our motivation.

The Deputy Chairperson (Ms Forsythe): Sharon, you mentioned the small business rate relief consultation, which closes tomorrow. I have two questions to ask on that. A lot of people have been in touch with me to say that they have already responded to the consultation or that they are looking at it in a different light, following the valuation. Could the consultation deadline be extended, or could consideration given to how the goalposts may have moved for some people during the time that it has been open? How many businesses would, effectively, be knocked out of the small business rate relief scheme, based on the revaluation? Have you an idea of that number?

Ms Gallagher: I will ask Andrew to come in on that last point.

We will take your first point back with us. There is a time frame in place, because we want implementation on 1 April this year. That will have an impact. I understand your first point about having some discretion in that, however. There are still 24 hours left to respond, and there has been a huge amount of engagement to date. The Minister understands: when Andrew was involved in engagement over the summer, he realised that that was the case, and the briefing to the Minister recommended that that be looked at. We are in the right space, therefore, but we will take that point back. Andrew, will you cover the second point?

Mr McAvoy: We are working through the data for the new valuation lists for the business sector cohorts. We came up with the options based on the current list. On the overall levels, the value of the relief increased under the consultation proposals. With any reval, we will see shifts where people come in and out of small business rate relief. We made the point deliberately in the consultation document that we know that there will be shifts as a result of reval. That is part of the rationale for the uplift in the threshold and the increase in the percentage amounts.

On the question on the responses, there is daily contact with Hospitality Ulster, at this point. It got its consultation response in this week, after the new valuation list was published, to reflect the views of the sector. I am working with Hospitality Ulster's researcher. If it wants to supplement its response — if businesses want to come in after the fact — data can still be taken into account. We are not shutting the door to anybody, but, as Sharon said, we are conscious of trying to deliver the changes that people want on 1 April. That is why we have kept such a tight time frame all along.

Ms Gallagher: We want to get the benefit of it as soon as possible.

The Deputy Chairperson (Ms Forsythe): There are a lot of moving pieces that are affecting businesses at the one time. People are concerned, and they are right to raise those concerns. However, it is good to know that we can work with you on behalf of our constituents.

Mr McAvoy: We have been engaging with that sector since the summer. It has been a continuous process with not just hospitality but retail, manufacturing and everyone else. It is important to outline the wider context for the feedback: we are looking at the rates end of things, but there is a much bigger picture, with issues that are outside the direct control of the Executive — issues relating to the VAT situation in the South and the implications of last year's autumn Budget and its continued effects on the operating costs of businesses, energy costs, staff recruitment and retention and other things like that. Yes, we are looking at rates, but we have to be aware of the wider picture of support.

The Deputy Chairperson (Ms Forsythe): I also asked if you had any idea how many businesses might be knocked out of the small business rate relief scheme on the back of the valuation. If you do not have that information but could share something with the Committee afterwards, that would be appreciated. I would be keen to get that.

Mr McAvoy: We do not have that information at the moment. We are trying to formulate advice for the Minister, for next week, to try to move this forward as quickly as possible.

The Deputy Chairperson (Ms Forsythe): That relief means a lot to so many businesses.

Mr McAvoy: It does. The changes will actively stop most of the businesses from falling out of the scheme. In some of the sectors that we have been talking about, there is a slight increase in the numbers.

Mr Humphrey: The small business rate relief threshold is set at £15,000. After we have done the revaluation exercise, 75% of properties will still be valued at £15,000 or below. Therefore, if they do not qualify for another form of relief, they will qualify for small business rate relief.

The Deputy Chairperson (Ms Forsythe): Thanks very much. I appreciate that.

Mr Harvey: It is good to see you again. Did Reval2026 have any unexpected outcomes?

Ms Gallagher: I will bring Gary in to talk on that in detail, but I can talk on that at a high level. Basically, the previous Reval was done in the context of COVID. We expected significant movements from that, because that Reval reflected unusual trading. You will know that, thankfully, Northern Ireland has moved on considerably since the COVID years. There is a lot of development, with new builds and expansions, and better trade, so changes were expected. With regard to some of the highlights, Gary will be happy to talk about those trends.

Mr Humphrey: A key figure for people to be aware of is the overall increase across Northern Ireland. We are looking for a rental value, and, in the period between the two revaluations, the valuation list increased by 15%, which means that there has been an upward trajectory — NAV growth — between the two valuations lists. The rate poundages will be rebalanced to ensure that the overall exercise is revenue neutral, which will mean, essentially, that, if someone is at or below 15%, they should see little or no change in their rates liability — in how much they have to pay. If they are above that, they will probably have to pay more in rates liability. That is a key figure.

I have given some of this information to you already, but, when we boil that down to some of the emerging themes, the combined NAV growth in retail between the two valuation dates is 9%, and the average retail increase is 7%. In theory, that means that retail will shoulder less of the overall rates burden after Reval2026 takes effect. It is a similar picture for offices. Their overall NAV has increased by 9%, and the average increase is 5%. Again, offices will, in theory, shoulder less of the burden. There is also growth of 16% in warehouses and manufacturing, so there is either no change or very little change in how much more they should expect to pay.

The big ones that stand out and that very much make it into the media are hotels and pubs. I do not mind giving a bit of context as to why they stand out. The last time we valued them was in the context of COVID. We valued them on 1 October 2021. If you cast your mind back, you will remember that that was just before the omicron wave, when a lot of restrictions were in place. We looked at what somebody would have paid to rent that property at that point, given the uncertainty that existed then. We had never come across anything like that before anywhere when carrying out valuations or rating valuations. We therefore liaised directly with the industry — the key stakeholders, which are Hospitality Ulster and the Hotels Federation — and tried to capture as much of that evidence as we could. We looked at their accounts in the run-up to COVID, during COVID and then up to nearly when we were going to publish the list, so that we could see the overall impact. We ended up negotiating, saying, "We acknowledge that there is a degree of uncertainty, so we will give a reduction to the pre-COVID level", which is what we called it. That was the most solid basis that was available to us at that time. For pubs, that was 20%, and, for hotels, it was 30%.

At the start of the revaluation exercise, we went out to talk to those bodies again. We essentially said to them that they could keep that level of depressed turnover if they gave us the evidence to show that the properties were still operating at that level. When we got that evidence back, to be honest, none of them could show us that they were still operating at that level, which meant that, although we had a limited response rate of 30% from that sector, we still have to go forward and value the whole sector. None of them could show that they are still at that pre-COVID depressed level. This is a draft list, so there is still an opportunity for them to do that. If they could prove that now, we would welcome that information and would reassess the NAV. Since the percentage was based on the fair maintainable trade, the way that that works, essentially, is that, if we have nothing else, it is put back to at least the pre-COVID level. That is the natural way that it works. Mathematically, to unwind that level of support, the percentages are slightly higher. To unwind the 20%, we have to increase it by 25%. For the hotels, it was originally was 30%, and we have to unwind that by applying 43% in order to go back to the pre-COVID level. The most common increase across the hotel sector is 43%. That is just the unwinding of that COVID allowance, which, the evidence would suggest, is no longer appropriate. That is why they are seeing such significant increases.

On top of that, we have to value a property as it stands at the date on which the list takes effect. We are aware that some of the business owners have built extensions or opened up new income-generating streams. Some pubs, for example, may have started serving food or have added accommodation. We have to factor that in. The fact that those material changes are being picked up at this time skews the figure for the overall increase. Ideally, we would like to do that during the life of the current list, but we have not had the capacity to do that. We are, therefore, picking it up and trying to make sure that the levels are fair and accurate at the date on which the list takes effect.

Mr Harvey: The problem is with judging based on turnover rather than square footage. That does not take into account debt that people get themselves into by investing. Its not being rated on profit causes the problem.

Ms Gallagher: All businesses are assessed in exactly the same way. This is about calibration across businesses. There are the same factors. There is very little discretion from the valuation team in relation to the assessed values. A set of evidence is used, there is the legislation and there are the processes that are accrued across England, Scotland, Northern Ireland and Wales. All things being equal, everybody is assessed in the same way — fairly and equitably — in order to come out in a calibrated way.

Mr Harvey: Do you have further details on the appeals process and whether there are any discernible trends yet?

Ms Gallagher: We have not got into appeals yet, because we are still finalising the list. Our appeal today, which is in line with the Minister's appeal from earlier in the week, is for people to contact us if they have any concerns. We have had a relatively low uptake in people contacting us, at this point. About 161 businesses have contacted us. Gary can talk about the types of queries, if you would like, but there has been limited reach into Land and Property Services. The team is ready to listen and to talk: that is part of the process.

Mr Harvey: Do you have staff at hand? Will you provide a quick response to those queries?

Ms Gallagher: We absolutely do have staff at hand. Dedicated, trained staff who are based in the businesses' local areas, and businesses can go straight through to that valuation specialist.

Mr Harvey: The Minister said, in the Chamber, that many properties experienced a downward valuation. That is not what I have seen, so far. How many properties have experienced a downward valuation, by number, percentage and sector?

Ms Gallagher: The terminology involved in that is interesting. The Chair mentioned people not being valuers. I am not a valuer, either, and I do not know the detail. It is about relativity: the 15% is an average, and the downward variation is a comparison with that 15%. I am sure that Gary will stop me if I start to go awry, but it is about relativity. The rebalance — the calibration that I have been referring to — of how the rates burden is applied will mean that some businesses will not see a change in the way that it plays out.

Gary may want to add more or to correct me, if I led the Committee astray in any way. I am trying to keep it as straightforward as I possibly can, because it gets very technical.

Mr Humphrey: What Sharon said is correct. We know that around 65% of properties are at that 15% level or below. For around 40%, the NAV does not change at all, so they will potentially see an even better outcome with regard to the rates level that they have to shoulder.

Ms Gallagher: May I come in on that, Chair? If we pause Reval2026, those properties may lose out on the more positive impact, so we take it on the whole tax base for businesses. I just wanted to finish that point.

Miss Dolan: Thank you all for coming to the Committee. Your presentation was very informative, and you have answered a lot of my questions. We have all been contacted by businesses in our constituencies, and there is no doubt that they are doing their best. They should not have to face a rates bill that they cannot afford to pay. Sharon, following on from the Chair's point, what would the implication be, apart from some businesses getting away from their reduction, if the Minister were to pause or cancel the reval?

Ms Gallagher: The primary implication is that we would not have put equity back into the system, because it still goes back to 2021 trading, during COVID. The 2024 valuation was intended to put everybody on a level playing field, assessing everyone at the same time and in the same conditions. If we were to pause that, there would continue to be an inequality. Different businesses will have had different experiences during that five-year period. Primarily, it is an inequality piece.

Secondly, and importantly, we are using the tried and tested methodology that is used across England, Scotland and Wales. There is no alternative in place at this time. We have been working, and will continue to work, with our counterparts to try to understand the fairest way forward. The main question to ask is: if we were to pause it now, what would the next steps be? We have gone through all the work, applied the methodology — everyone has had the same opportunity to provide the information — and, as we sit here today, we have an assessment that is coming to finalisation, in which we calibrated, across the 75,000 businesses in Northern Ireland, what percentage of the rates burden they should shoulder, based on their operating arrangements.

Miss Dolan: Fair enough. I was shocked that only 161 businesses have contacted you this week. Is that since last Friday?

Ms Gallagher: As of close of play last night, yes.

Miss Dolan: Gary, could you give us an outline of what sorts of queries you are getting?

Mr Humphrey: The queries, so far, have been quite modest, to be honest. At times, when people mistake the valuation for their rates bill, as they sometimes do, there has been a lot of alarm at seeing those large increases. Those are the kinds of query we get. We have been contacted by members of the hospitality sector, who are, understandably, alarmed at some of the increases that they have seen. We have been able to work with a number of them to try to explain it. We ask them to supply that information, and we will use that evidence to reassess the valuation. At this point in time, we are working on an what we are calling an informal review. The list has not taken effect yet, and the statutory mechanisms of the appeal process are not in place, so we are looking at it informally.

We have reviewed the two queries that I can think of, off the top of my head, and they have gone down, so it was beneficial for those people to get in touch with us.

Miss Dolan: That is positive. I think you said that 30% of hospitality returned their turnover figures. What was the uptake in other sectors?

Mr Humphrey: Generally speaking, it was around 50%.

Ms Gallagher: It was 50%, in overall terms.

Miss Dolan: So, basically, if someone is concerned, you would encourage them to contact you now with their turnover, if they have not done so already?

Ms Gallagher: Absolutely.

Mr Humphrey: It is slightly different for the hospitality sector, because hospitality has a turnover. It is done by reference to turnover, and we know that, when hospitality businesses are open, 100% of them, in theory, have turnover, so we would expect that figure to be higher. It is an opportunity for them to help themselves to ensure that their valuations are fair and accurate. In other sectors, such as shops, some premises are vacant. Others are owner-occupied, and there would be no rental evidence for those, so we do not expect there to always be a 100% response rate from that sector.

Miss Dolan: That is great. As I said, you have answered most of my other questions. Thank you very much.

Ms Gallagher: Jemma, the more information we get from businesses, the more accurate a position we can provide. It allows us to do that calibration properly. Going back to your point, if we paused or deferred the reval, the 2021 position would continue, which would be innately unfair, given the significant shifts that I have talked about.

Miss Dolan: Thank you very much.

Mr Kingston: Thank you for your answers, so far; they have been helpful. We have received representations from Hospitality Ulster — I am sure that you are aware of its letter — claiming that there have been 300%, 400% and 500% increases in NAV. What explanation do you have for that? When you see such an increase, does it not trigger an internal review? Has that scale of increase been raised with you by the Minister or by other people who need to challenge it?

Ms Gallagher: I have looked at those cases, Brian, and at the evidence base, where it has been provided. Some huge figures, of up to 800% or whatever, have been quoted. That is not the case, but there are some significant increases. I have looked at those to understand the rationale. In some cases, the information has not been provided, so we have used best evidence. In others, information has been provided that shows that the valuation is based on the factors that Gary referred to, such as extensions of the footprint of the business and additional trading. We consider all those factors as part of our evidence-based judgement. In approach, methodology and fairness, we apply the same process to those businesses as we do to every other business, and that is what brings the shifts up and down in the calibration.

Mr Kingston: You have looked at some cases and can see a reason for the scale of that increase.

Ms Gallagher: I can see the evidence base for the increase, yes.

Mr Kingston: OK. Explain how rental property value and turnover are balanced in their use in valuations. Are companies charged based on both those factors or on only one?

Ms Gallagher: Gary talked about that, but we are happy to cover it again, because it is complex.

Mr Kingston: It was part of the presentations.

Ms Gallagher: Yes. I am more than happy for Gary to answer that again, if you would find that helpful.

Mr Kingston: The concern, as some businesses have said to me, is that the very large increases are being sent out, as a shock tactic, to businesses that have not returned information.

Ms Gallagher: Absolutely not. I can guarantee that we have had significant engagement throughout the process. There are no surprises here. Ultimately, the final position may well come as a surprise, but the methodology, process, engagement and timelines have been fully consulted and engaged on.

This is part of the finalisation process. We have not finished the list. We have published everything on our portal: people can go on to the portal and see that; it is transparent. I say to people who have any issue with any of the evidence that we have used to please contact us, and we will look at the assessment again, review it and engage with those people. I have no concerns about the process. All the businesses that we have looked at are treated in exactly the same way, using the same methodology and approach, so all things are equal.

Mr Humphrey: I will add to that. When we saw the emerging outcomes, with the large increases and what have you, we were alarmed — I do not know whether "alarmed" is the right word, but we looked at the story behind them. In May of last year, we wrote to the people in the sectors in which we had seen large increases, saying, "We see there's a significant increase. You haven't given us the information. Now is a further opportunity to have your say and ensure that your valuation is fair and accurate". We got only eight responses to that. We tried to balance it to make sure that the letter went to the right people, by using the ratepayer's address. We have tried.

As I sometimes say when talking about it with my colleagues, the idea of our draft list is to stress-test our valuations. If people think that the valuations are inaccurate or have information that they have not given us, we would welcome that. We would prefer to look at the information and make sure that valuations are fair and accurate.

Mr Kingston: Some of those large increases are in the valuations of businesses that have provided all the information that you required.

Ms Gallagher: Indeed.

Mr Humphrey: Behind all the businesses with large increases, there is a valuation story. It comes down to their having had extensions or having changed their business operating model by adding new income streams. I use the example of accommodation and, maybe, food that had not been reflected previously. It boils down to fairness and equality. The property has to be valued as it stands at the date on which the list takes effect.

It would be unfair to the other operators in that locality if we did not reflect the changes in its business model.

Ms Gallagher: Again, I appeal to any business that is unclear about its assessment to speak to us. We can sit down and talk to them about the evidence base that we used and our rationale. It is not in our interests not to work with the industry or to debase or undervalue the importance of thriving businesses, but we have a process that we need to follow to make sure that there is innate equity in the rating system based on comparability. I urge any business that is unclear to contact us.

Mr Kingston: I will raise another matter. My office is on the Ballysillan Road in north Belfast. I have been contacted by a series of small businesses along that road. You said:

Businesses have contacted me, and I looked them up on the website. They are all getting increases of around 60%. Those businesses include a convenience store, a Co-op store, a bakery, a barber, another convenience store, a vape shop and a chippy. They have all had increases of around 60%. They are small shop units.

Ms Gallagher: Brian, there is a range of different businesses. Again, I appeal to business owners to reach out to Land and Property Services to discuss the rationale and engage with them on it. It is extremely difficult to speak in a blanket way about the differences, because each business will have its own rating and valuation story to tell. I cannot give a short answer to that, nor would I want to. Should any of those businesses want to contact us, I ask them to access the portal, and we will reach out to them and talk through the rationale.

I mentioned the roadshows. They will help businesses to understand the fact that the NAV is not their rates bill and how it is used as a core component to ensure equity across all businesses in Northern Ireland. It is the starting point, not the end point. I do not want not to answer your question, but it really is for the businesses to speak to us.

Mr Kingston: It is concerning that seven different types of shop all had the same increase. That concerns me because there might be less chance of getting their rates reduced. I will certainly work with them all and encourage them to reach out.

Ms Gallagher: That is very helpful. Some businesses will not get a reduction, and some people will experience higher rates bills as a result. The purpose of the recalibration is to make sure that the burden of rates falls on the appropriate people based on the assessment at a point in time. However, we can make sure that the assessment is right and that businesses understand the information that we took into account, how that information was used, and how it will feed into the overall rate-setting and billing process.

Mr Kingston: People want to know how much they will pay or by how much their rates bill will increase. When they get a final figure, is that the increase that they can expect?

Ms Gallagher: No.

Mr Kingston: Do you think that it will be less than that?

Ms Gallagher: There are many factors to do with the final figure, including regional rate setting. Gary or Andrew can talk you through the steps in that in more detail. The revaluation is an input into the process that calibrates the burden of rates across businesses. It is only the start of the process; it is not your rates bill.

Mr McAvoy: I will touch on a couple of things to do with poundages. District councils are setting their rates at the moment; that is the number-one factor. That will happen by 15 February. The regional rate increases are in the draft multi-year Budget, which is out at the moment, but a decision will have to be taken on the regional rate in the very near future. Before those two poundage decisions are taken, they are rebased for the revaluation effect. They go down, and any annual increase is then applied in relation to expenditure decisions. That is applied to the value. Any relief is then applied. For example, if we are enhancing the small business rate relief to give a discount at the end of the bill, that is applied.

It is misleading to go off the value. You have the poundage that is applied to that value and any relief to which someone might be entitled. For example, manufacturing businesses are entitled to significant relief. It would be misleading for such businesses to go off the basic data. Gary, do you want to touch on the valuation challenges and explain how people can get in touch with LPS between now and the rates bills?

Mr Humphrey: Certainly. As I said, we have the informal review. We have tried to make it as easy as possible for people to contact us. The best way in which to do so is through our online portal. We capture a little bit of data when they come through, which allows us to triage them at the back end. That means that we get that through to the valuer who dealt with that class of property or one who works in that area. We are responding to those queries well within 24 hours at the minute. We encourage people to use that facility. You can also contact us by phone or our dedicated email, but, in the online contact portal, you can add evidence, such as turnover information, or you can fill out a rent-and-lease questionnaire, which was the information that we originally asked for.

We have those mechanisms in place, and we have trained teams on standby. We call it the revaluation enquiry management system. That is up and running.

Mr Kingston: You mentioned an average increase of 7%. I think that I said that it was 15% earlier. I think that you said that 15% was the overall average increase. However, it is a 7% average in retail, and a 5% to 9% average in office. Have you seen those? So far, I have not seen any such examples. However, you are telling me that that is what your statistical reports are showing.

Ms Gallagher: Sorry, Brian, will you clarify the question?

Mr Kingston: The increases for retail that have been brought to me are about 60%, but you are telling me that the average for retail is 7%.

Miss Hargey: Not in Belfast.

Mr Humphrey: It is done on a Northern Ireland-wide basis.

Ms Gallagher: Based on two years' work, engagement, assessment, evaluation and consideration of the evidence bases, that is where businesses have come out at, on a relative basis.

Mr Tennyson: Thank you, Sharon and team, for your presentation. I know that this is always a difficult evidence session. I do not doubt for a second the professionalism and integrity of the staff at LPS, or of the process that we have gone through. However, I share the concerns expressed by others about the impact on hospitality in particular. I was disappointed that the Minister did not meaningfully engage with some of those concerns when they were raised in the Assembly.

I know that you do not want to get into individual cases, but I have seen the NAV of one business that was brought to our attention. It lost the COVID-related reliefs and the small business rate relief, but its NAV has shot up by 283% as a result of some refurbishment that it has done, so it is likely to see an increase in its rates bill.

Given that you and the Minister were aware of the impact on hospitality, why have those valuations been published now, without any further information about potential sectoral targeted reliefs or transitional relief, as was done with the previous revaluation in Scotland? The revaluation could be phased in so that businesses would have more time to adjust to the new economic reality.

Ms Gallagher: Thank you, Eóin. There are two points in that regard. We are publishing now because it is part of the engagement; it is about openness and transparency. It is to start the dialogue and debate, to encourage people to reach out to us to talk about their assessment, and to make sure that their assessment is correct.

It is the Minister's clear intention to have a progressive rating system and have appropriate reliefs available, bearing in mind the cost of such reliefs. We have already started that process. Andrew engaged all last summer, as you know, on proposed changes to SBRR. The Minister, as you know, has already consulted on that; we talked about that consultation ending tomorrow. It addresses some of the factors that we could have anticipated. In this round of policy considerations, we have done more pre-engagement before the consultation than ever before. Andrew has been very alert to and aware of concerns and emerging findings among stakeholders. We have got slightly ahead of the game with regard to the SBRR. That is why it is so important for people to input into that because it will have a material impact on ameliorating some of the worst impacts of how the revaluation may play out.

Mr McAvoy: With regard to SBRR, there was a question in the consultation about sectoral support. We did that to allow sectors that we anticipated being affected by revaluation to raise that in the context of the overall consultation. We do not close the consultation until later this week. It was deliberately timed to catch that and be able to take it into account.

The move towards more frequent revaluation exercises was to dispense with any need for a transitional relief (TR). Every revaluation would rebase it on the basis of the most up-to-date rental evidence, as that is the fairest way to distribute the tax. With regard to interventions, a lot of the schemes, for example, in England and Scotland, would be funded by people who would be benefiting from a revaluation. Therefore, instead of the benefits being phased in straightaway, they see their benefits slowed down. They then get stuck in a perpetual cycle of TR scheme after TR scheme between every revaluation, which they cannot get out of. As I said, the move to more frequent revaluation exercises was to avoid that. We are the most frequently valued part of the UK at present.

With regard to small business rate relief, we were aware of the issues in the sector generally coming out of COVID and the other cost-of-doing-business pressures. We built that into the consultation process to allow the Minister to look at it before April.

Mr Tennyson: I appreciate that some work on small business rate relief is happening. My challenge is that some of the changes in the NAV are so significant that even the changes proposed will not assist businesses. They are being hit in the absence of any certainty on the proposed business growth accelerator, which the Minister has talked about, and also without any transitional relief. I appreciate the logic of more frequent revaluations supposed to get round transitional relief. However, surely given that we are in a unique circumstance coming out of COVID, and the impact on one sector is so clear, is that something that the Minister has even asked LPS to explore?

Mr McAvoy: The consultation has not closed yet. When the information from stakeholders comes through, it is provided to the Minister in the wider context to allow decisions to be made. Intervening for everybody affected by revaluation, and subsidising its impact, comes at a considerable cost at a time when there is significant pressure on the public finances. That is not to say that we will not be looking at that.

Ms Gallagher: There is a fine balance to be struck because, as Gary said earlier, in doing the wholescale revaluation, which looks at all properties, we paused some of our work to revalue individual businesses. If we set aside or pause the revaluation process, which looks at everything as one and recalibrates all businesses at a point in time using the same methodology and asking for the evidence, we will need to start our process of looking at separate businesses, and that could make the balance even more uneven for some businesses.

Mr Tennyson: That is helpful, Sharon. Does LPS or the Department conduct any economic impact assessment to accompany revaluation? If so, what is its status? Is it likely to be published? Where does that process sit at the moment?

Ms Gallagher: There has been no economic assessment because the process is to inject equity and fairness across all businesses. That is the purpose of it as a staring point for the rating system.

Mr McAvoy: The economy affects the revaluation as opposed to the revaluation affecting the economy, as the starting point.

Dr Aiken: Thank you very much indeed, team. It is good to see you all again. I did not see one of you in Bangor on Sunday, so I do not know quite what was going on there.

Mr McAvoy: I have a daughter who has a shoulder injury.

Dr Aiken: I hope that she gets better soon. I will be thinking about her.

I have a couple of questions. First, when the Minister was asked a question on the Floor of the House, he did not seem very sure, when he was talking about revaluation, which areas were going down and which were going up. He hinted — well, he looked across to his officials — and explained that it was particularly the case in the retail and office sectors. What has the quantum of the reduction been there? We all understand that revaluation is part of the overall rates package, but can you explain what the quantum of the reduction has been?

People get nervous when they talk about a reduction in the revaluation for retail space, and there are always concerns raised about what is happening with e-commerce businesses. Can you talk to that?

I have another question about hospitality, but an answer to the first question would be quite useful, please.

Ms Gallagher: When answering any question in detail, it is incredibly difficult to remember all that. There are so many figures around all the parts of it, which I will ask Gary to speak to.

With regard to nomenclature, or the way that we phrase things, on reductions, it really is about calibration and an average of 15%, and where people sit relative to that.

In overall terms, if you think back to 2021 and then 2024, it is natural that there would be an increase in the NAV because everything has gone up in price since. Therefore, the 15% increase is not out of step with other jurisdictions, and it provides an average upon which everything else pivots.

Dr Aiken: It was the relative difference. That is what I am trying to get my head around.

Ms Gallagher: I appreciate that it is a difficult concept to understand. That is why I have taken some time today to say it again and again. It is not about winners or losers necessarily; it is about equity and fairness within the overall increase in NAV.

With regard to some of the detail, is there any particular sector that you are interested in? We have quite a bit of detail, and it would be helpful to guide Gary to where he needs to go.

Dr Aiken: We have seen quite a lot of push for grade-A office space, and one of the concerns has been the impact of that on the market and the fact that it was rising in cost, and, therefore, you would expect it to rise in NAV value.

With revaluation, I am surprised that the Minister was particularly talking about office costs. I understand that there is still pressure on grade-A office space, particularly in the greater Belfast area, so I would have assumed that it has gone down. I do not know whether the Minister was fully briefed on it, but it is an area that I want to tease out a bit more with you because it seems quite strange.

Ms Gallagher: Absolutely. That is a level of detail that I will ask Gary to go through, having led the process.

Mr Humphrey: You are right in what you say. There is always difference. We have lots of different statistics to hand, but the overall NAV for offices has increased by 9% between the revaluations. In Belfast, it is 10%. Belfast is where the bulk of grade-A offices is.

Dr Aiken: That is below the 15%.

Mr Humphrey: It is below the 15%, so, in theory, they would shoulder less of the rates burden once it is rebalanced. Outside Belfast, the change for offices is 6%.

Dr Aiken: It is a question that was raised with developments that are going on in South Antrim in new, high-quality office space. It is clear, when you visit those areas, that enormous investment has gone into them. A big return is expected on them. It is much more than the square footage of office space, considering the IT network and the power supply that have gone into it. They are very expensive chunks of office space. The developers expressed to me how pleased they were that the revaluation was not going there.

That leads me to my second question. I have been contacted by a lot of people in the hospitality industry. A part of the industry that owns quite a lot of hotels and pubs in my constituency is looking at increases in the revaluation of about 127%.

I then did the maths myself, and, yes, it is around 127%.

You will have seen the NAV figures from Hospitality Ulster: the increase is 47% for pubs and 84% for hotels. We are all talking about creating a level playing field — some valuations will go up, while some will go down — so what percentage of the market is the hospitality sector carrying to enable the lower level of rates for grade-A office space and some other spaces? I understand that some industrial spaces' rates have gone down in the revaluation. I would love to understand how the curve got to that point. What proportion of the hospitality industry's rates has gone up, and what proportion is that of the overall figure to enable the rest of the properties' NAV to be below the 15% mark?

Ms Gallagher: Before Gary answers that, Steve, I remind you that it is not just about the hospitality industry. We are looking at all businesses. Others' NAV will have increased above 15%. We have the full breakdown.

Dr Aiken: I understand that. Like Eóin, I have no complaints about what LPS has done and how it has done it. You have a mechanism and are trying to present it to us. You have been given the difficult job of trying to explain it. I do not know about those other sectors. I can deal only with the sectors that have been reported to me in my role as an MLA and member of the Committee for Finance. I would like to understand in a bit more detail.

Mr Humphrey: It all boils down to the fact that we follow the market evidence, and where it falls, it falls. We do not set out to say that the hospitality sector should shoulder a certain amount of the rates burden. When you look at the overall share of the valuation list between the revaluations, you will see that there is very little difference in almost all the sectors. In Reval2023, warehouses' NAV, for instance, was 21·46%. In Reval2026, it is 21·68%. That is the pattern for all of what we call the primary classes, even for the like of pubs. In Reval2023, the NAV for pubs was at 1·23%. It is now rising to 1·63%. That is the percentage of the overall valuation list that pubs will have at the end. That is not our end goal. We are trying to make sure that, based on the evidence, the valuations are fair and accurate.

Dr Aiken: I think that it was Brian who said that valuations are based on turnover rather than on profit. The Finance Committee covered that about four or five years ago when we were looking at how the Scots were doing revaluations. We also looked at valuations across the rest of our nation. Do you still not get sufficient data from the hospitality industry to enable you to come to a decision? Is it fair to say that, when the hospitality industry properly engages with you, you may be able to make a better assessment?

Ms Gallagher: Steve, I said earlier that there had been about a 30% return rate from the hospitality industry. The more informed information that we get, the better and more true the assessment will be.

Dr Aiken: Thank you for that.

Mr Carroll: Thanks, officials, for the presentation. I have a couple of quick questions. Members have quoted different percentages, but does the Department of Finance or LPS have a figure for what the average percentage increase will be? For example, do you have a figure for pubs and hospitality venues in Belfast? Can you say that they will pay, on average, x amount of money? Is that detail available now?

Ms Gallagher: No. We are at the start of the process, Gerry. We are trying to calibrate the NAVs and make sure that that list is finalised for 1 April. That will be inputted into the overall rating process, as Andrew described earlier. The impact on the rates bills has not yet been calculated.

Mr Carroll: When it is, Sharon, will LPS be able to provide figures for the average increase that pubs and hospitality venues in, for example, Belfast will be paying, or can those figures not be provided?

Ms Gallagher: Once the process finishes, we will have a better understanding of the impact of the rates billing system and the quantums involved.

Mr Carroll: There has been some discussion about turnover being used rather than profit in the valuation. In a general sense, do you have a concern that the presentation of profit does not always accurately reflect valuations in the hospitality sector or other sectors? If that is the case, how did you come to that conclusion?

Ms Gallagher: What we are concerned with is equity and fairness, and with having a methodology that brings us to that point. We will continue to engage, as we have done over recent years, as Steve and others outlined. This is not the first time that that issue has come to light. It has been within the purview of the Committee and the Department for a number of years, and it ebbs and flows as revaluation processes come to a conclusion. If there is a better way to do valuations, we remain in listening mode. We will be influenced by other jurisdictions by listening in order to understand what works for them, but we will also inform what they might do. At this point, we have not come up with a better or fairer methodology, but we remain open to discussing, engaging and influencing —.

Mr Carroll: That is fair enough. What I am getting at is this: say that a certain organisation's profit rate is up by 5%. It may have other assets or resources that are not classed as profit, however. Is there an issue with accountancy or the presentation of data? Do you find that that issue exists?

Mr McAvoy: That has been said about property tax systems generally. If we were to go off profit, and a business was investing in something or spending money, that might not come up as profit in its accounts. That forms part of our consideration when it comes to using just profit as the basis for a methodology in a property tax system.

Ms Gallagher: It is important to say that we cannot legislate for those scenarios. What we take is a standardised approach. That approach is applied in the same way across all businesses in order to come up with an equitable, fair calibration across businesses.

Mr Carroll: Profit is a good measure, but I imagine that some organisations — not all — have an increase in turnover that is not presented as profit, and, as such, they have extra wealth. That is what I am saying.

Ms Gallagher: We work on the evidence that is available.

Mr Carroll: On Monday, the Finance Minister said that the rateable value of properties and businesses across the North had increased by around £230 million since the previous revaluation. Is that an LPS-provided figure, or is it from surveyors? How is that figure arrived at?

Ms Gallagher: I think that that is the monetary equation of the 15% in overall terms. We looked at the information available, based on market forces on 1 April 2024, and how the value had increased from the same date in 2021. There has been a 15% increase, which equates to the value that you just set out.

Mr Carroll: Sorry, will you say that again for clarification?

Ms Gallagher: The figure that you set out is the 15% increase in the NAV, which reflects the market conditions at that point in time.

Mr Carroll: OK. Thanks.

Miss Hargey: Thanks very much for your presentation. As you said at the outset, we all want to see a fair and equitable system. That is important. We are being lobbied by certain sectors, but it is important that, when we are looking at all potential options, we know the implications. If we do something for one sector, we need to know what that will mean for others. We need to know about the implications for not just those sectors that are more vocal. None of us wants to see any business close, particularly our small to medium-sized businesses, because they are the bedrock of employment in our economy. We want to grow those businesses. The blip in all of this has been COVID, and that is not unique to here either.

You said that it is a process, so no final outcome has yet been determined. As part of that process, I know that you met representatives of the hospitality sector earlier today and that the Minister is meeting them tomorrow. It is good that, as part of that process, you are in listening mode. It is about getting the information out there that it is key for more sectors and businesses to come forward at this point in the process in order to shape it.

Sharon, you touched on what would happen if you were to pause the process. It may be a popular thing to call for, but what are the implications? Are there pros and cons? We need to understand them. There is another element involved. It is stated in our papers that you looked at 75,000 businesses in different sectors as part of the revaluation. The hospitality sector has been vocal, and it has genuine concerns, but how many of the 75,000 businesses are from that sector? I am conscious that there are businesses that have not yet been so vocal. It is therefore about ensuring that none of them are missed out in any decision that is taken. I would like to see a breakdown of the numbers.

Ms Gallagher: I will answer your last point first, Deirdre, if you do not mind. The hospitality sector represents about 3% of the total tax base.

Miss Hargey: Of the 75,000 businesses, roughly how many are from that sector?

Ms Gallagher: Not all hospitality businesses will be impacted on to the same degree. I do not have the figures.

Mr Humphrey: There are roughly 160 hotels and 1,150 pubs.

Mr McAvoy: About 100 of the pubs are not occupied. About 1,047 pubs are up and running.

Miss Hargey: OK.

Ms Gallagher: I stress, Deirdre — apologies, because I know that you know this — that all are not equally impacted on.

Miss Hargey: I get that. As Jemma said, we are all being lobbied, not by all sectors but by certain ones, and are hearing that there is to be a 200% or a 300% increase. The big thing for me is your saying that the NAV does not necessarily reflect what the rates bill will be. It would be good if you could explain that in a bit more detail, because what some are saying, and what the public may be thinking, is that rates bills will double. Is that the case? What is the process for people who come to you now to engage and provide their details, and how important could that be to the outcome?

Ms Gallagher: I come back to my core message from today. If businesses have experienced a really high increase that they do not recognise or understand, they need to reach out and talk to us to help us make the assessment as fair and equitable as it can be. There are cases in which the uplift is significant. As I said, I have looked at some of those cases, and we have had conversations about them to make sure that we understand the evidence and that, where we have the evidence, we are on solid ground.

To be clear, I will say that, even if people submit evidence now, their NAV will not necessarily come down. There will be very good reasons in many cases — in all cases — for a considerable percentage uplift, because the uplift is based on the evidence and our methodology. I again appeal to any business that is concerned that we have got its NAV wrong to come and talk to us so that we can explain or understand and then move forward.

The movement from the NAV to the bill — whether the bill is a direct consequence of the NAV — is complicated, as Andrew said. We are at the first stage, which is about putting everyone on a level playing field to make sure that rates, once decided, are distributed fairly across the 75,000 businesses. Pausing the process because of one sector or one group would have an impact on others.

Miss Hargey: If the process were to be paused, would there be potential for a challenge from those other sectors? Although hospitality is an important sector — there is no doubt about it — particularly for the low-income workers who are employed in it, there are 73,000-odd other businesses. I am therefore keen to understand the implications one way or the other.

Ms Gallagher: It is important to say today that we do not lack empathy. It is not that we do not listen. We want businesses to survive. We have no particular view on one sector or another, but your point is valid. There are 75,000 businesses here, so it is about having equity and fairness across the piece. If we were to decide to pause the process in response to some groups that will shoulder more of the tax burden because their assessment, which has been clear, open and transparent and has taken account of the evidence, points to the need for them to take on more of it on, doing so would — in my view, without having thought about it beforehand — present a risk. The process is strong, and a judicial review (JR) is based on the process.

Miss Hargey: You mentioned the pre-engagement that there had been, particularly with the sectors that you knew might have an above-average increase. I am keen to understand with which sectors and representative bodies you had that pre-engagement. Will you give us some detail on that? You have also engaged in a process since the publication of the draft list. You mentioned roadshows. Will you provide information about them? I am keen to hear it. It would be good for the Committee to hear how you plan to communicate that over the next period.

Ms Gallagher: I am happy to set out the full engagement process for you in writing, but, if it helps, Gary will point to some of the pre-engagement that was held in the lead-up to the revaluation and to some of the big-ticket things that we are planning to do in the next weeks.

Mr Humphrey: When we start the collection phase, which is the start of the cycle, we contact all the major stakeholders, such as the hospitality groups, manufacturing groups and Retail NI. We try to maintain good linkages with them. I like to think that those relationships are positive. We try to encourage them. We raise awareness of the revaluation process and of what we are trying to achieve, and we let them know how their members can help themselves. By and large, they are happy to pass on that message.

At this stage of the cycle, we start informing people of the outcome. We have been having conversations in the background. For instance, we start off by working with our colleagues in revenue and benefits on the district rate-setting process. We will tell councils. We also hold meetings with councils' elected representatives to give them an overview of what has happened in their area. We have ongoing engagements with the key stakeholders and, sometimes, meet their members. For instance, I have done webinars in the past for Hospitality Ulster. We do that kind of thing. The Reval2026 roadshows is probably our biggest piece. We did them previously, and they turned out to be beneficial. We held at least one session in each district, in partnership with the Northern Ireland Chamber of Commerce and Industry. We tend to hold the sessions in a local library. They are public events, so anybody is free to come along, listen and have some of their questions answered. They do not just get a briefing about the revaluation. We often have local staff present. People pass on their queries, and the staff then take them away and look at them. We then make sure that we follow up on that engagement to see whether there is anything that we can do for those people.

Miss Hargey: My next question touches on points that Eóin raised about the potential for getting interim relief. As I said, the blip has been COVID. I assume that, as a result of COVID, some businesses saw a reduction in their NAV back in 2021, but there has been growth in certain sectors since. You touched on the methodology. You are following the same methodology that the sectors follow. It is recognised that there may be a huge leap in the NAV for certain sectors and subsectors. Scotland has looked at interim relief. Is that something that could be considered for here? Is it something that representative bodies have raised at this stage of the process? I am keen to hear more about that.

Ms Gallagher: It is certainly what we are hearing. You have already pointed out that the Minister will be engaging with key stakeholders tomorrow. The position on transitional reliefs is outwith the process on which we are leading, but it is a potential response. Providing transitional reliefs would cost money, so it would need to be considered in the context of the draft Budget, but it is an option.

Miss Hargey: Potential proposals for inclusion in the three-year Budget were mentioned in the Chamber the other day. There is money set aside in the draft Budget that could offer more relief support.

Ms Gallagher: That is the £10 million for SBRR.

Mr McAvoy: That is a small business rate relief enhancement.

Miss Hargey: If that is in the final Budget, it will be an additional support.

Mr McAvoy: It is support that could be provided.

Ms Gallagher: If it is agreed, the £10 million will allow proposals for SBRR to move forward.

Miss Hargey: I have a final question. As I said, the hospitality sector has been very vocal. Have other sectors or their representative bodies reached out with their concerns if you were to pause the revaluation process or look at doing other things? Has there been any engagement, or will that happen at the roadshows?

Ms Gallagher: To be frank, the reason that I specifically asked for the number of queries, the nature of them and from whom they came was to understand that question, because, in providing a service and undertaking this task, we want to be alert to emerging trends and of where the concerns lie. The short answer to your question is therefore no. As Gary said earlier, more basic queries, rather than big, fundamental queries, have been coming through. We have not received such queries to date.

Miss Hargey: OK. Thank you.

The Deputy Chairperson (Ms Forsythe): Thank you, everyone. Again, as all members of the Committee have said, we totally respect LPS and your professionalism and integrity during the process. It just highlights the fact that, when we are looking purely at finance and the processes involved, we see those processes carried out and completed. In the real world, however, there are wider implications. As Eóin said, what economic assessments and transitional reliefs mean for businesses is something that we are all doing our best to navigate. You have been generous with your time, and we really appreciate that.

Sharon, you said that you will be having meetings with the Minister to discuss the pub package that was announced yesterday in England. I ask that you keep us up to date with that. We are keen to hear how about progress on that, because there is crossover here. For anyone who is listening in to the Committee meeting, you have made it very clear that they should contact LPS. I am sure that we, as elected representatives, will be in touch to support a lot of the businesses. For me, coming from a rural constituency, a lot of the businesses that have approached me would not necessarily have engaged with their representative body before this revaluation. They feel that they are smaller and more rural. As such, they would not be attending the big Belfast events to engage with those representative bodies. Today's session has shone a bit of light on the gaps that there may be in some parts of Northern Ireland. If you were to keep us informed about the roadshows, we would really appreciate that. Thank you very much to you all for having come here today. We really appreciate it.