Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome Colin Neill from Hospitality Ulster; Janice Gault, the chief executive of the Northern Ireland Hotels Federation; and Glyn Roberts, the chief executive of Retail NI. I invite each of you to make a brief opening statement, after which we will go to questions.

Mr Colin Neill (Hospitality Ulster): Chair and members, thank you very much for the opportunity to come along today. I appreciate that it has been a fast-moving situation and that events have overtaken your invitation.

Hospitality Ulster has been around since 1872. Our membership base comprises pubs — when I say pubs, I refer to the 5a category, so that includes nightclubs or whatever — hotels, restaurants and a number of visitor attractions, as well as the airports. The membership body is charged with making sure that our members' voices are heard.

Things have moved forward. The Minister made a brave decision. He listened and reacted, and that is to be welcomed. Things are now moving forward towards a resolution that will, hopefully, ensure a fair rate. We are about paying a fair rate: that is not an issue, and nobody expects rates that rates will not go up. It is unfortunate that some people were looking forward to a reduction in rates and to them coming down at this valuation, but that that has not come through. We are keen to find a solution that is fair and equitable and that will allow us to get on with doing our day jobs.

Ms Janice Gault (Northern Ireland Hotels Federation): The Hotels Federation represents hotels, guest houses and guest accommodation. We welcome the Minister's decision, having faced quite a considerable rise in rates against a fairly difficult background. Our industry has invested heavily and is still growing. Our greatest concern is the lack of resource, going forward, and how uncompetitive investment would have been in the longer term. We understand that there are difficulties for other people, but we recognise that the doubling of our industry's rates contribution was not palatable to anybody, nor, for that matter, was it sustainable. We will await further instructions from the Minister. We have assured him that we will engage with him and his officials to make sure that we come up with something that is more workable in the long term.

Mr Glyn Roberts (Retail NI): Thank you very much, Chair. Retail NI is in a slightly different situation from our colleagues in hospitality. We very much welcome Minister O'Dowd's decision. Stopping Reval2026 was the right call, given its potential impact on our colleagues in hospitality. We should not forget, however, that 25% of retailers also would have faced very significant increases in their rates bills. I have spoken to a number of our members. One in particular was not only seeing nearly a 50% increase in his valuation; but it tipped him over the line in the small business rate relief scheme. He was losing the 20% that he got from that scheme and was facing a significant rates increase on top of that. He had not made any alterations to his store in the past six years. He did not have an ATM or an off-licence, nor had he expanded the store, but he was, nevertheless, unexpectedly facing a significant increase. He had filled in all the revaluation forms, as expected. We picked that up across the board, so it is a mistake to think that our sector in any way got away. Whilst the effect was not as bad for our sector as it was for our colleagues in hospitality, we were hit by it.

It is worth pointing out that retail and hospitality are the twin pillars that support our high streets. Together, we account for most of the businesses in our town and city centres. We are facing a high street dereliction crisis, with vacancy rates at around 25% — nearly twice the UK national average. Had the Reval proceeded, even considering what happened to our friends in hospitality, it would have made a bad situation significantly worse.

Another ongoing unfairness with the revaluation process — this one and previous ones — is that many out-of-town multinational big box retailers still pay less per square metre in rates than many independent retailers in town centres and high streets. One of our members in Strabane pointed out that a well-known out-of-town big box retailer is paying £50 less per square metre than independent town-centre businesses in Strabane. Despite that, big box retailers generate footfall of well over 100 times that which is currently experienced in the town centre. How on earth is that remotely fair or equitable? A lot of those big box retailers already have an unfair competitive advantage, given their location, the fact that, at variance with retail planning policy, they have free car parking, and the fact that many of them have dedicated bus services. Despite that, in many instances they pay less per square metre in rates than many independent retailers.

Whilst we welcome the Minister's commitment to remaining in listening mode, retailers need real reflection on the challenges that they face and clarity on what happens next. That is important, because we have heard nothing from Land and Property Services (LPS) or the Department of Finance about what the next steps are. Indeed, LPS have pulled out of our trade show next week.

The Chairperson (Mr O'Toole): LPS?

Mr Roberts: Yes.

We need to see what the next steps are and how we going to get meaningful consultation with those who are directly affected.

The other thing is transitional relief, which I understand is available in England, particularly for smaller businesses that have seen increases and have now been taken out of the £15,000 net annual value (NAV) threshold for the small business rate relief scheme, because they are paying more. Where is the transitional relief here? I understand that there was money for transitional relief through Barnett consequentials, due to the situation in England. Where is that, and how is it being applied in Northern Ireland? Going forward, we would like to see a new cross-sector business rates advisory group to help to shape the next steps for the Reval, looking at the procedures and methodology, and to co-design a new, high street-focused rate relief scheme to support independent retailers, hospitality and leisure, which should be modelled on the English system.

There are some good points in the Minister's strategic road map on business rates, showing that here is lots that he has listened to. They include improving the small business rate relief scheme, phasing out the vacant property rate and introducing an accelerator scheme that would effectively be a scale-up rate relief scheme. Those represent a welcome step forward, but there remains an elephant in the room, which is the fact that our members pay the highest business rates in the UK by a country mile. A fundamental review of the entire rating system is needed. We need radical change to our broken and antiquated system of business rates. With the perfect storm of National Insurance contributions, rates and energy costs, our members are at breaking point. It is a cost-of-doing-business crisis that is threatening jobs and businesses and holding back economic growth. We need government, at all levels, to address that crisis.

The other challenge that we face, in the short term, is our 11 councils striking their local rate. I am greatly worried, given what I have heard, that we will see rates rises at well above inflation. That will make an incredibly bad situation even worse. We are, however, in solution mode. We want to work with the Minister, and we need to focus on how we can co-design a rating system that is fair and equitable and that ensures that our public services get the income and funding that they so desperately need. Thank you, Chair.

The Chairperson (Mr O'Toole): Thank you very much. As always, members should indicate — several members already have — if they wish to ask a question. Several members have indicated. Thank you for keeping your opening statements concise and to the point: that allows us to get to questions.

We are all looking to next steps. You have given a bit of an indication, Glyn, but, answering as summarily as you can, what do you all think should happen next? I will take your responses in the same order as your opening statements. I suppose that the Minister has paused the revaluation. We do not know whether that means that bills will be issued based on the previous valuation, that he plans to proceed with the valuation as is but with some form of transitional relief or other mechanism, or whether he will scrap the previous valuation entirely. What do you think? I will start with you, Colin. What is your preference for what happens next?

Mr Neill: I will give you my understanding, but I apologise if I misrepresent the Minister's views. My understanding is that we are continuing with the NAV from the previous Reval, for the next 12 months, while there is time to engage and look at this Reval. The Minister told us that he would take account of the reviews in Scotland and in England, which has now had the same problem.

I will explain this a bit: you often hear us talk about the turnover model. The proper name for that is the receipts-and-expenditure model. Public houses and hotels here are valued on a variation of that model. Restaurants are valued in the same way as retail shops, so they sit across the two systems. As a trade body, we will go away and compile some evidence for the problems with that, but it will come down to the fact that the model has existed for some time — it is in law — and, to change it or do away with it would probably be radical and hard to do. What we need to change, however, is the formula — the numbers and the multipliers — in that model. We have seen everything in our world change, particularly since COVID, which accelerated that change, and the model no longer takes account of those incredible cost levels, so the profitability is really low now. The formula in that model does not take account of that.

We must go on to look at the situation with restaurants in the context that tourism is a key element of the Programme for Government (PFG). We want to double tourism in the next 10 years. Hospitality provides four out of every five tourism jobs, so that doubling will not happen unless the sector can expand and grow. From our point of view, it will be a case of taking our time, going to look for evidence and trying to bring data to the table. I am a great believer in the old saying, "In God we trust; everybody else must bring data". We will do our best to bring evidence.

I will use the opportunity, Chair, to correct something that I said previously. I misspoke during a media interview. I said that I have no faith in LPS. I have no faith in the formula; the people in LPS are really good. It is not about people: everybody is doing what the system does. The system turned out that anomaly, and it is now about trying to create a system that will get us back to something sustainable.

The Chairperson (Mr O'Toole): That would be welcome. I should put on the record that the Committee is, pretty consistently, pleased with the engagement that we get from LPS and with the professionalism of its officials. Notwithstanding individual comments about the revaluation, it is welcome that that is on the record.

Janice, what should happen next?

Ms Gault: Underpinning the turnover model is the idea of its being fair and sustainable. For anybody in a normal business, it is not a rentable value that is being arrived at. Nobody would have expected an 86% or 85% rise in their rent — that would have been unpalatable. That simply would not happen to a private landlord. We would like to see some smoothing of that curve. For how to do that, we can look to what was done in England, where different mechanisms were put in to do it. It would be slightly more challenging here, based on the fact that England has a uniform business rate, whereas we do not. It also has a discount on the uniform business rate, with further transitional relief on how much bills can go up by.

Our turnover will always rise. It has to rise: that is the simple model that is in place. The unusual position that occurred in 2020 and 2021 was as a direct result of the pandemic. While turnover has risen considerably for the majority of people, profit has not. That has to be taken into consideration. The primary prima facie case that the methodology in the framework is based on is the turnover model. We are keen to look at the mechanisms behind that.

I am in the same situation as Colin. The Minister told us that we would continue with our NAV as it was at Reval2023. Part of the issue with that is that there is a 30% discount on those. Regardless of what happens, if you were to write the discount out straight away, your rates would automatically rise by something like 19%, because your rates bill represents a certain amount of that.

The other thing for both larger businesses and small businesses is to have the opportunity to budget. They may not get the figures until January, February or March. They are basically trying to budget, and, for some people, that is a very big price ticket at the end of the week — it is £10,000 a week for some businesses. The sooner that we get the information, the more we can look at it to see how it works and move forward on that basis. We have been through how the LPS calculated some of the figures and are happy to work with that. For some of the solutions, however, we need to be a little more creative and to find a way of smoothing that curve where there are rises in rates in line with inflation and not necessarily in line with the perceived rentable value.

The Chairperson (Mr O'Toole): You have discussed that a bit already, Glynn, but please come in.

Mr Roberts: We need immediate clarity from the Minister on what the next steps are. We are outlining the need for a structural approach, with the setting up of an advisory group to which, at times, not just the Finance Minister but all Ministers can bring us in to tell us stuff. We need to be in a position to help them to co-design and act as a touchstone group to make sure that such problems as these do not arise. That would be a much more structural approach.

I will touch on the broader high street stuff. Even stripping away the impact that Reval2026 would have had on our members, people forget that the damage that it would have done to our hospitality sector, had it gone ahead, would have had a huge impact on our high streets. The 25% vacancy rate is getting worse. An Executive-wide approach to our high streets is needed. It is very frustrating that, two years in, the Executive have not recalled the high street task force. That was the group that brought together key Departments, business trade unions and the voluntary sector, all of which agreed and communicated on that sort of coordinated approach. There is no silver bullet to the challenges. Fixing business rates is not the silver bullet for fixing the problems on our high streets. The way to address the challenge is by all Departments doing their bit, incrementally, and I do believe that we can address the challenge. I am optimistic.

On where we go from here, we have had no correspondence from LPS or the Department of Finance. Our colleagues in hospitality and the hotel business have been engaging diligently on the issue. At the minute, however, there is a question over whether this is a pause or a one-year suspension. Will we be back at this in January of next year? Where does this process fit in with the Assembly election, which I know is weighing heavily on all your minds? We need clarification. We have ideas about how we can get a properly structured approach to that engagement and cooperation, but, at the minute, we need to see what the next steps are.

The Chairperson (Mr O'Toole): I will bring in members, starting with the Deputy Chair. We are relatively tight for time, and lots of members wish to ask questions.

Ms Forsythe: Thank you Chair. Thank you all for joining the Committee. To reiterate what others have said, the Finance Committee has the utmost respect for Land and Property Services and the professionalism of its valuation services. We know that it followed its methodologies in conducting the revaluation: nobody doubts that. The outworkings of that will, however, be one of two things: LPS changing the methodology by which it applies the valuations; or there needing to be consideration given to the wider circumstances when it brings forward what is there. We want to see the way forward on this as quickly as possible.

When the valuations process was completed by Land and Property Services, was there any engagement with you, as sector leads, to indicate what the outcome was going to look like, or was the first time that you saw it when the list with the average percentage increases to each sector was published? Were the organisations that you represent prepared for this, or was it a huge shock?

Mr Roberts: We received a useful briefing from LPS on the impacts on our sector. We were preparing to assist members who had concerns about how they could appeal or challenge the valuations. We worked with LPS on encouraging all our members to fill in the appropriate forms when the Reval came out. We worked with LPS to play our part to make sure that it got the responses that it needed. We have a trade show next week at which we wanted LPS to deal with our members' queries. I understand why it will not be at that next week, but we need clarity on where to go from here.

We need to look at the methodology and at whether new legislation or regulations are required to change that. There is an ongoing problem with out-of-town big box retail businesses still paying less than independent retailers and why that is. Under any equitable or fairness criteria, that is ridiculous. All we are asking for is a level playing field. We need to ensure that we have a rating system that is fit for purpose, that is based on accurate figures and for which the valuation is accurate. It needs to have appropriate reliefs to help start-ups to scale up and help our high streets. That is not rocket science. We can do this, and we can, hopefully, get to a point where there is rates income that can help to fund public services. I believe that we can get to that point, but that will require a recasting of the relationships between the Department of Finance, LPS and us, so that, if there are issues or work-throughs at an early stage, we can address the problem and avoid what has happened in the past few weeks happening again.

Mr Neill: I will chip in, without repeating a lot of what Glyn said. There is ongoing engagement with LPS, and I wish to clarify that the staff there are good people. We expected a significant increase, but nowhere near what we saw. I was taken aback, and that fed through into the industry. I cannot speak for whether LPS was aware of the impact and of what the reaction would be. Given the speed of events, our industry was in shock and wanted to be heard. It is welcome that the Minister heard us. I am on record as saying that that is a really good demonstration of the value of the Assembly.

Ms Gault: We also had such communication, and we had informal communication with the valuers, whom we know relatively well. The real concern was the delay from November to January, which presented considerable difficulty for everybody. We had expected a rise of about 30%, with something on top of that, but people were not prepared for 84%. Some people got rises of 200%, which came as quite a shock to them. We were not warned a couple of weeks before but the day before.

Ms Forsythe: A key part of it is trying to keep the process clear and transparent. We want everybody to be engaged and to have sight of the information so that they do not have nasty shocks. That is not good for anyone; it is not good for businesses or for perceptions of how the Assembly works. Whilst it is good to see the pause, there is good learning from it about the importance of having clear and transparent processes and engaging everybody at every stage.

The Minister kept making the point that the level of response to the process, especially from the hospitality sector, was low. Glyn mentioned that he had worked with people to get responses in. Given how the process has gone, is it more likely that levels of engagement with businesses will be higher and that businesses will provide more information?

Mr Neill: I will come in on that because I know that there was a low level of response from pubs. That has been a problem for years, and we have gone around in circles with previous Ministers and LPS people. A business needs to have confidence in the model before it will put something into it, so, because it has no confidence in the outworking, it will not commit to it. It is a chicken-and-egg situation, and we have gone round in circles on it umpteen times.

I hope that what is happening now will allow us to break that circle. We need to build the model on evidence. People need to feel that they will get a fair hearing and that the model will give them a fair outcome. That is the challenge. If we are sitting here in a year's time, saying, "Put your accounts in and see what comes out", we will get the same level of response because there will still not be faith in the calculation.

Ms Gault: LPS has 162 hotels on its list; 144 hotels are currently certified by Tourism Northern Ireland. When we went through the list as it is at this moment, we identified 135 hotels. Of those, 15 to 20 need to have their details changed. It is about the communications system; it is difficult to communicate. As businesses change their names or re-brand, some of the names on the list go out of date. We went through the process of identifying the differences in the list that we had from LPS's list and sending them back. We suggested that it would be worth its while having a data-sharing arrangement with Tourism Northern Ireland whereby LPS could pull off the details of certified businesses and see where they sat so that it could work through the list.

I appreciate that there are some 70-plus thousand businesses, but sending communication to a business that no longer exists will not work, particularly if it is sent by email, because it will simply go to spam. We have had challenges with that in the past. I realise that it is important, and very difficult, to keep a database up to date.

Forty per cent of the hotel sector responded, which would provide a large model. We have not seen exactly who responded, but I was able to work it out by number of bedrooms — in bedroom terms, it is probably slightly higher than 40% — and the response rate from the hotel industry was 40%.

Ms Forsythe: Thank you. My final point is one that Glyn mentioned and which came up in our session last week. An important aspect that no one had been talking about was that the valuations could knock people out of the small business rate relief scheme, which could have a huge impact. As we move towards a clear process, it will be important to keep that on the agenda, because it is an outworking that a few businesses that were in touch with me had not fully appreciated. I thank you all very much.

Mr Carroll: I have three questions. The Minister backtracked on the revaluation. Why did that happen? Was it because of the outcry and the pressure applied by you and others? Was any specific evidence, papers or whatnot supplied by you? What is your assessment of why the Minister budged?

Mr Neill: I can take that one.

The Chairperson (Mr O'Toole): Is the question directed to specific member of the panel?

Mr Carroll: It is directed to whomever wants to answer.

The Chairperson (Mr O'Toole): Do you want to start, Colin?

Mr Neill: I thank the member for his question. We did not have time to bring data, but I think that the listing and hearing of information from small businesses made a difference. Lots of our small businesses and members contacted their MLAs. I am on record as saying that I applaud the Minister, because he listened and acted. That is what a local Minister does. Had it been a Westminster decision, none of our representations would have had impact. The Minister listened after the announcement. It was a short time period and we had to mobilise quickly because the revaluation was published so close to the start of the rates year.

As I say, we will put in more data at this point. I believe that the Minister listened and, with more information, made a brave call — and the right one.

Ms Gault: I think that it was a mixture of many factors. The hotel estate practically doubled in value, which would have been very difficult to understand. I think that the model was looked at. We, that is, hotels, pubs and restaurants, contribute quite a bit to the rates, considering the overall percentage of our turnover and profit.

The Chairperson (Mr O'Toole): Do you know what percentage of the overall rates take that is?

Ms Gault: The overall rates take is between £740 million and £720 million. We contribute about £11 million or £12 million. Our percentage would have gone up from October 2020.

The Chairperson (Mr O'Toole): That is just hotels?

Ms Gault: Yes.

The Chairperson (Mr O'Toole): We should go back to Gerry's question now.

Ms Gault: Pubs are in or around the same.

Mr Neill: Pubs are at about £15 million, and they went to over £20 million. The rest is buried in the ordinary retail base and we cannot find it.

Ms Gault: Had there been a period of reflection, it would have been easier to identify those areas and consider them. If you are basing revaluation on a fair and maintainable principle, that is not fair and maintainable because, in three years' time, you would have been talking about the hotels estate doubling in value again. That is one of the outworkings of going on a revenue-only or a turnover-only basis. That was one of the pieces of information.

For many in the smaller businesses, it would have been very disruptive to the community as a whole, particularly when we have been charged with doubling the amount that we are to bring to the economy. In 2024, tourism brought in £633 million. That is from overseas, so it is considered an export. That would double by 2035 from an overall figure of just over £1 billion, when you include everything, to £2 billion. If that were the case, by virtue of our turnover going up, our rates would double in that period as well. That means that hotels stop building, investing and, in reality, eventually stop employing more people. That is something that none of us wants to see.

Mr Carroll: Thanks. I have other questions. I take your point about small businesses and I agree with it. Should the bigger hotel chains, especially the bigger pubs and companies, be paying significantly higher rates? If so, have you a figure in mind? I do not have an exact figure myself, but I think their rates should generally be higher. I note that, in the last year, the pre-tax profits of the top 100 companies in the North were up by about 26%. That is £1·86 billion, or just under £2 billion. That is almost the exact same figure as the NAV for the total on domestic properties. Have you an idea of what rates those companies should pay? Presumably, you want the bigger, more profitable and income-rich organisations paying higher rates. Have you a figure of what that should be?

Mr Neill: Unfortunately not. It would be very hard for the likes of us, outside the system, to work out. The key here is a fair, maintainable value and rate. No one wants to run away from paying their fair share; we all use the services and live here.

The joy of the Northern Ireland hospitality industry, compared with the industry in the rest of the UK, is that it is locally owned. It is owned by people here, which means that a much bigger proportion is retained in the economy. I am working off the off the top of my head, so do not quote me, but I think that 56p in every pound is retained. We buy a third of all of Northern Ireland's agri-food. We are a huge employer. Hospitality is Northern Ireland's fourth largest private sector employer. Businesses have to make profit because they have to be able to reinvest and grow. Take, for example, the cost of refurbishing a bar. I was in one in the city centre recently that cost £3·7 million just to refit. The cost of building a hotel now is astronomical.

"Profit" is not a bad word. It is about whether you are paying a fair share, no matter what scale you are, out of your profit. We have seen the challenge of more taxation, and I point that at Westminster. Westminster has caused a lot of our problems. I modelled a restaurant in Belfast where, in 2020, 32% of its turnover was taken in tax; now it is 47%. Basically, every time you hand that restaurant a pound, 50p is taken in tax.

We would like to pay more. However, the problem is that, as wages have gone up, employers' National Insurance contribution has gone up too. That means that you are caught in between. The UK tax model has caused problems because we are one of the few industries that is very labour-intensive. We are probably one of the few industries that will stay labour-intensive, even if after AI works its way through the system and reduces employment. It is now about getting the balance where we have to find a way to support labour-intensive businesses so that they can remain profitable.

Mr Roberts: I will answer Gerry's question in a slightly different way. I raised the point about the huge growth in "big box" out-of-town retail. Since planning was devolved to councils, councils have passed far more out-of-town "big box" retail than the old Environment Minister. They pay less per square metre in rates and enjoy all sorts of competitive advantages. That was recognised when Sammy Wilson was Finance Minister. He put in place a surcharge to ensure a level playing field. That might be an area to look at. Ultimately, the issue with revaluation is that it does not grow the cake; it is about how you slice it. [Interruption.]

I am glad that that was not my phone going off.

Ms Gault: Sorry.

Dr Aiken: Do not worry, Glyn. It would have cost you if it was.

Mr Roberts: It would have.

That is certainly an area that could be looked at.

You can also look at this in the sense that we have huge numbers of vacancies and huge dereliction in our town and city centres. The rating system could be used as an incentive for the big retailers to come into our town centres as well to fill those derelict sites. Not far from your constituency, Gerry, is the Tribeca site, and there is the Sirocco site, which I was looking at the other day. It is unbelievable that those sites have not been developed.

Could we use our rating system to incentivise businesses to go to those sites? When a business locates in a town or city centre, there is automatically a multiplier effect, with bigger footfall. Footfall is vital. If all those hospitality businesses closed, our big worry would be the impact that it would have on high-street footfall and, obviously, on our members.

The future of our high streets and town centres is about us creating destinations and experiences. That is where retail and hospitality have to work together. Leaving aside the impact that the revaluation would have had on our membership, if it had had the impact on hospitality that our colleagues described so well, it would have had a huge impact and made a bad situation on high streets worse. We could create a playing field that is fair and equitable and which is a win-win for our high streets and town centres and also where the big multinationals start paying their way on business rates. That is not an unreasonable thing to ask.

Mr Carroll: Thanks, Glyn. If you could send more details through, I would be really interested in following that through.

This is my final question, because time is of the essence. Colin talked about labour. Without the labour of people in hospitality, there are no pubs and no hotels to speak of. Have any of you had any engagement with Unite the union's hospitality branch? It has done a lot of work on the Get Me Home Safely campaign, which is trying to stamp out harassment in the workplace, in some cases from managers and, in other cases, punters, and to get workers home safely, making sure that employers play a role so that workers are not out of pocket getting home safely. Have you had any engagement with Unite on that campaign specifically?

Ms Gault: Unite has not reached out to us, so I cannot comment on that. However, having spoken to a number of hotels outside town, I know that they pay for their staff to go home at night in taxis. They bear the entire cost, and they make a contribution to staff who are either coming early or coming later. It is probably not as much of an issue in the city centre. We are keen to be sustainable and to use public transport provision, particularly the night buses. I have spoken to hoteliers who fully fund their workers to get to and from their employment.

Mr Carroll: OK. If you happen to have any details on that, I would be keen for you to share them. It would be interesting to see the numbers or individual's specific experiences. That would be really helpful.

Mr Harvey: it is good to see you today. First, it has been good to hear that the Assembly has been useful and has made a difference. You all seem to have had different levels of engagement. Perhaps each of you could tell me a wee bit more about that. I thought that it would have been the same for everyone, but it seems to have been different across the board.

Mr Roberts: We have been engaging with LPS on the revaluation, and we are in regular contact with the Department of Finance. Our engagement with the Department of Finance is very good. I know that, unfairly, it gets a bad rap at times. When the bridge at Kilrea was closed, the Department of Finance was very quick off the mark to establish a rates hardship fund, which was a big help to the traders in Kilrea who were suffering because of the bridge closure.

It is our ongoing engagement with the Department of Finance and LPS good? Yes. It is clear that the Minister listened to the issues that we put forward, first, on start-up rates. That has been a big help with the first-year costs of any new small business. Secondly, on the scale-up side, the Minister has outlined the need for an accelerator programme, which, again, is a pull-through from the rest of the UK. Our engagement is good. The point that I was making is this: let us put that in a more structured and coherent format so that it can happen on a more measured, cross-sector basis.

Mr Neill: The Department of Finance and LPS officials are very good. They will always give you a ring and come back to you, and there is always an exchange of information. That is really useful when we are working on issues such as the review of the small business rate. There is consultation and communication. It goes back to the fundamental challenge that we have, in that they are stuck with the formula for receipts and expenditure — the turnover model. They cannot change that, and until we break the cycle, we keep coming back to issues like this.

Ms Gault: I concur with Colin. The rates model is the issue, because people are nervous about engaging with it. That is a challenge for LPS, and a difficult one. We need to come up with a methodology that is simpler, in many ways, for smaller businesses. If you pick up the phone, you get a response very quickly. I have no difficulty with that at all. Since COVID, we have had good engagement with LPS, and if we need a question answered, it is there. There is a fixation on the turnover figure, and we need to find a transitional way of solving that issue that gives people in the industry faith in the process.

Mr Harvey: That is good news that people are on the end of the phone. If there is a dedicated person, at least you can have confidence in them. I take it that those conversations will continue.

Mr Neill: Yes.

Mr Roberts: We have to be solution-based as well; it is not just about reacting. I have always said that, in general, the Programme for Government should not just be an arrangement between four political parties. It should be a co-designed effort that involves broader civic society. There are key performance indicators and outcomes there. It is crucial to be in solution mode. Colin and I have put forward lots of ideas about rates over the years, and we are hitting home with some of them. The Minister's strategic road map on rates was a good step forward. Is there more that needs to be done? Yes, there is.

Mr Harvey: At least you feel that you are being listened to. Is there anything else that you wish to add, Colin?

Mr Neill: This is an opportunity to reset the dial and engage again, which I look forward to.

Mr Kingston: I am trying to understand what happened last time with Reval2023, which was based on 2021 values. There was a recognition at that time of the impact of COVID. I am not sure whether a discount was applied or whether it was based on a valuation of turnover — 20% for pubs and 30% for hotels, more or less.

Mr Neill: The model is supposed to come out with what is known as a fair maintainable trade (FMT) for an average operator of a premise. An adjustment was made behind the scenes when we came out of COVID. It was not the case that we got a bill that said that the discount was coming off it. An adjustment was made, and there was roughly a 20% reduction for public houses and a reduction of about 30% for hotels. We had been talking about that coming off, given that the world has actually got worse since COVID, which was a huge challenge in itself. That coming off, plus the high rises, have been factors in how we got to those incredibly high increases.

Ms Gault: Revaluation works by taking three years' trading. The three years of trading that were taken for Reval2023 included COVID. In what were very unusual circumstances, people's actual turnover had gone down. Trading was severely curtailed in 2020 and 2021, so the NAV automatically dropped because turnover had gone down. Then, in recognition of that challenge, a further discount was applied. I suspect that because of how our rates are calculated, unlike the UK model, the discount was applied to the NAV as opposed to the actual rateable pound. You would have had to apply a different percentage.

At present, the uniform business rate is 48 pence in the UK, but it has been dropped for businesses to 43 pence. That would be very difficult to do here, given that there are 12 different organisations involved in the setting of rates — the 11 councils and the regional rate that is struck by the Assembly. When you add those two together, the simplest way to do it was to take it off the NAV. When people got their NAV figure in 2024, it was discounted by 30%. Rates represent about 60% of your NAV, so that was a good discount for businesses. It worked well and was an easy model to understand. It was probably considerably less than many businesses in England and Wales got, but it was a good model for us at that time and it recognised the difficulties.

Mr Kingston: I do not know what the revaluation was before that.

Ms Gault: The revaluation before that was in 2019. We go by lists, so we are currently on list 10. We had list 9 and list 8. If you take from list 9, it has always gone up. From list 9 to list 10, however, you can see a 90% increase overall. We have gone back as far as list 7 and looked at how it went. Before COVID, it would always have gone up due to the fact that turnover automatically rises. You are compounding that over a period of three years. Even if you rise with inflation, and inflation sits at 3%, it will rise by about 11% when you take in the compound figure. If you take the inflationary figures that have come in from 2022 to 2024, you will have a massive rise in inflation. Therefore, people's turnover will have increased considerably as a result of that.

That is one of the big issues when you go for the turnover-only-based figure, because you have nothing to mitigate it. You cannot, for example, mitigate your car park. Your car park is part of your estate. The cost of insuring, maintaining and controlling your car park has gone up considerably, but you have no methodology with which to get that off your rates bill. It is a straightforward turnover model, at the bottom of which there is no recognition of any fall in profit or mitigating circumstance that you may have. COVID threw the whole thing out of kilter; it threw most people's rates systems out of kilter. We had the very unusual circumstances of rates decreasing.

Another factor that will affect us is investment. A two-star hotel may have become a three-star or four-star hotel by means of investment or by adding a product. That will also affect the hotel's NAV, so hotels are effectively facing the prospect of being punished for investing while trying to grow their business and create more jobs, and that in itself creates an issue.

Mr Kingston: Is the situation different anywhere else?

Ms Gault: It is a little bit similar in the rest of the UK, but our model is based on the hotel's star rating coupled with a percentage. We currently have no one- or two-star hotels. We have a large cohort of ungraded hotels, which are ungraded because they perhaps trade under a brand that does not sit within the grading system or have made the choice to be ungraded. Basing the revaluation on turnover only is therefore possibly discouraging people from moving up a star.

That having been said, we have spent half a billion pounds since the end of the pandemic, and the idea is that we will spend probably £100 million to £200 million over the next two years. Probably three hotels will open this year, with probably another four or five hotels to come, some of which might end up being classified as guest accommodation. There is, however, large movement of investment, and that is the one thing that we really do not want to stop. We want to ensure that that investment grows.

We also have the beauty of being able to create jobs anywhere in Northern Ireland. We have a good regional spread. The basic model is that one bed equals one job, so we can create a resort hotel in a place where nobody else is going to do something. People like the idea of somewhere remote where they can go and stay the weekend. That is something that the Committee needs to consider. A big fixation is on size, but some hotels need to be large enough to cover the costs. If they want to do whole-market segmentation — bus tours, conferences, meeting and events — they have to have the number of bedrooms to facilitate their doing so.

Mr Kingston: I want to ask you about retail, Glyn. Discount was applied to Reval2019. Was there any COVID impact on Reval2023?

Mr Roberts: Our members got the rates holiday as a result of COVID. The biggest issue with that was it was phased out in other parts of the UK, whereas we had the big cliff edge, which then came as a huge shock.

Mr Kingston: It did not change the NAV, however.

Mr Roberts: No, it did not. All the revaluations seem to blur into one. In a lot of ways, when I cast my mind back to 2019 in particular, there were a lot of concerns. We helped a lot of our members appeal their valuation, and a good number of those appeals were upheld. We were very focused on the current revaluation, while our focus for the previous revaluation was on helping members who thought that their valuation was wrong to appeal it in order to get a better outcome, which we got for a number of them. We do not know the status of the current revaluation. Is it gone for good? Has it been paused? Is it coming back? Will it come back with our colleagues in hospitality getting a transitional relief? Again, those are questions that we cannot answer. That is why the Minister needs to make clear what the next steps are.

Mr Kingston: The paper on Reval2026 that the Committee received from the Department of Finance states:

with values in Belfast higher, at around 15%. I was approached by shopkeepers in Ballysillan who are all getting a 60% increase. Those are small, independent shop units. What have you been hearing?

Mr Roberts: We have heard the same. Increasingly, the calls and emails that we were getting were from independent retailers in north and west Belfast. I do not know why that was the case. The example that I gave earlier was of a retailer who had not done anything to his store yet had received a very significant increase. He could not believe it, and he lost his small business rate relief.

As I said, I do not know why that has been the case. There can be variations whereby one street has a lower rate than the next street. There are all sorts of variations that sometimes do not make any sense at all. If a business has invested in its store, such as putting in an ATM, an off-licence or a Post Office branch, that is reflected in the valuation, and, as such, it will expect to pay more. It will therefore be interesting to see where the Department goes with the accelerator programme. From what I understand is being proposed, if a business were to upscale, it would pay the old valuation for a year rather than the new valuation based on its scaled-up business. That is a good idea. It is important that that programme be got over the line as quickly as possible. We talk a lot about start-ups but not a lot about scale-ups. If we are to grow our economy, we have to make Northern Ireland the best place in which to locate, start up and scale up a business.

Mr Kingston: What mitigation would you like to see in place?

Mr Roberts: A type of scale-up scheme, called the accelerator programme, is being proposed in the Minister's strategic road map. I stand to be corrected on this, but, as I understand it, if a business scales up, create new jobs and enhances its store, or whatever business it is, as a result of its doing that, it will be revalued and will therefore pay more in rates. I understand that the proposal to be put forward by the Department of Finance is that the old valuation will remain in place for a year. An incentive is therefore being built into the accelerator programme.

There are other possible incentives from the Department that we could go for. For instance, we have said that if a business were to invest in green technology or in becoming carbon-neutral, it should be given assistance with its rates. Green growth would therefore be incentivised. Could the Department go further and use our rating system as an incentive to attract foreign direct investment (FDI) into areas of high unemployment in the west of the Province, where we have had traditionally poor levels of FDI? It is about using the taxation power that we have, which is rates. It is the only taxation power that we have at the minute. Could we use that taxation power strategically to attract FDI so that businesses can start up and scale up? We believe that that is possible and that we could get the returns that we all want to see.

Mr Neill: I will chip in there. Our restaurants fall into the retail classification under the turnover model. We have seen double-figure increases for our restaurants. The revaluation is supposed to come up with what is a rentable value.

Mr Kingston: What do you mean by "double-figure increases"?

Mr Neill: I mean increases of 20%, 25% or 30%. The revaluation is supposed to come up with a rentable value on which businesses' rates are based, but they would not get those rents, as that is just not feasible. An example in my head is the pub Horatio Todd's. Based on the turnover model, its rates have gone up from £2,000 a week to £3,500. If your landlord were to knock on your door and say, "I am putting up your rent by that", which is what the rentable is supposed to represent, you would be giving him the keys.

The Chairperson (Mr O'Toole): On that point, what LPS would say to that is, "You cannot be 100% sure, because of how the multiplier will play out, so the calculations that were done on the back of the NAV were not 100% guaranteed". Did LPS say that to you when you told it that you were really concerned about the increase in rates bills?

Ms Gault: We got an average figure, which was going to be 0·633. The previous figure was, I think, 0·611, so we brought in a rating expert and he multiplied that figure for us so that we could where the increase was. There was the increase in the actual rate pound, coupled with the NAV increase. The NAV is the big increase. Even if LPS had run with NAV without the discount, businesses were still facing quite a considerable rise in their rates, of about 20% or 22%. When the NAV increase was added on top of that, it went up to 0·633, which is effectively 20p more than what retail, hospitality and leisure businesses in England and Wales pay. They are getting a discount back to 0·43, whereas our average rate was recommended to be 0·633. We understand that that rate will probably now be slightly higher, because the rate pound will be adjusted slightly upwards to account for the fact that Reval2026 will not be applied in the 2025-26 year.

The Chairperson (Mr O'Toole): You mean 2026-27.

Ms Gault: Sorry, 2026-27. I am a year behind. We understand that it will probably be slightly higher.

The Chairperson (Mr O'Toole): Am I right in saying that you would not accept that as a reasonable figure? You are not saying that LPS is being unreasonable; you are saying that, given all the available information, you can be fairly clear that —.

Ms Gault: We based it on a prudent, mid-scale calculation. We went not to the highest or lowest but the medium point.

The Chairperson (Mr O'Toole): You were not exaggerating on the basis of just the NAV.

Ms Gault: No.

The Chairperson (Mr O'Toole): You were doing calculations that were defensible.

Ms Gault: We knew that, if we took the NAV model and worked it on 0·611, we would be able to see the increases. We did that and looked at the new model, so we saw where the increases were.

The Chairperson (Mr O'Toole): I just wanted to get that on the record.

Dr Aiken: I declare an interest in that I have probably talked to all of you — probably not you, Janice, but the other two — about this fairly regularly.

If we look at LPS's figures, we see that pubs make up about a 1·6% slice of the rates and that hotels make up about 1·7%. The NAV for pubs went up by 47%; for hotels, on average, it went up by 84%. Bearing in mind that that is just 3% of the overall total and that everything else sits roughly where we thought it would, at about 30% — plus or minus — how did LPS manage to get it so badly wrong?

Mr Neill: To be fair to LPS, it applied the formula that it was required to apply, so it did not get it wrong in that sense: the formula just threw out the wrong number.

The world of hospitality has changed. Labour costs are incredibly high. Our energy costs are the highest on the island and in the UK. Everything racks up: the price of beef has gone up by over 50% this year. Our talking about inflation coming up to 4% does not mean that all the other stuff went back down. Our turnover looks incredibly high, but profit has gone the other way — down. The formula does not take account of those costs. It does not account for [Inaudible.]

In our world, you have to invest heavily, but, as soon as you invest, your rates go up. The suggestion about investment came from one of my members. The problem is that that sort of model says straight away, "That is now more valuable; therefore, it would rent for more". It does not take account of the debt that you, as an independent person — our industry is 99·9% Northern Ireland independent people — have to pay. You might have to pay millions of pounds to refit your bar. The cost of Sky TV is based on your NAV. It is crazy. It might cost a small rural premises £500 or £600 a week, but, without it, the people do not come in. Your NAV then goes up, and it all goes up: we are in a vicious circle with a formula that has not caught up with the real world.

Dr Aiken: I remember, Colin, that, in our previous discussion, we were concerned about it going up by 30%; that is where the concern lay. It seems strange that, for just 3% of the overall total, the NAV is particularly high. LPS has told us that it is just a spike. There seems to be a complete lack of communication back and forth. I admire John O'Dowd as a Minister, and I cannot believe that, when this was presented to him, somewhere along the line, someone did not say, "By the way, there is a huge spike that sits above the 30% line, and the huge spike is coming from hospitality and the hotel sector, which is remarkable".

Mr Neill: For a sector that makes up such a small part of the rate base, there was an increase of something like £16·5 million.

Like you, I previously had great admiration for the Minister, and that has increased. A devolved Administration Minister listened to constituents and other people telling him that it did not work and was wrong, and he took the decision to amend that.

Dr Aiken: It really stands out. I look at the pie chart, which shows how much of the share the sector represents, and I then look at how much and where the increases are. That stands out.

The other thing that stands out is the increased money that is coming in from warehousing and all the rest of it while the percentage has been pushed down. What we are seeing, Glyn, is big box taking more of the sector. The take has gone up, but the percentage is being pushed down. It seems disproportionate. If we are trying to revitalise the high street or create jobs, how will we achieve that by building big warehouses?

Mr Roberts: Of course, we have the situation in a few towns where big retailers are trying to get their warehouses converted into retail use: class 1 retail.

It is of grave concern to us what a lot of the councils are doing: granting more and more out-of-town big boxes, when we have twice the UK national average in dereliction. That is not just empty shops, bars or restaurants; it is empty buildings full stop. We have asked the Infrastructure Minister to call in a number of these applications. We are clear that we want to see those big retailers come into our town centres. We have endless amounts of vacant space that they can locate in, and, when they locate, it is a multiplier effect for footfall. It is all about ensuring that we have a level playing field, and that is all we ask. They have the unfair advantage of free car parking, many of them have bus routes and we know the challenges that many of our members have with car parking, public transport and so on. From our point of view, it is about levelling the playing field. It is an area that we have highlighted on numerous occasions to LPS, and it might well require new regulations and legislation to adjust that and make sure that there is a level playing field. Had that been the case, you may not have seen such extravagant increases on my colleagues.

Dr Aiken: Yes. This is my final point. Glynn, you mentioned it: if you did not, I apologise, but I thought I would mention it anyway. It is the business about landbanking. We are not taxing landbanking. If you look at the warehousing and the rest of it and the implications of that, you see that a large amount is in our brownfield sites and the rest of it is just sitting there.

Mr Roberts: It was welcome in the Minister's strategic road map that he addressed the issue of the vacant property rate. Essentially, the Department has been subsidising dereliction. We have a whole industry of landlords trying to get out of paying rates, taking the roof off and doing whatever. We should say that we are going to get this land moving and into practical use, maybe not just for retail, hospitality or business: it could be for social housing in many of our towns. We have a housing crisis here.

It is absolutely right that the Minister addresses the issue of the vacant rate and makes sure that people pay their fair share of rates. Also, how can we use the rating system to incentivise town centre regeneration, in particular, or use it, potentially, to incentivise foreign direct investment as well?

Fair play to the Minister. He has indicated that that is his direction of travel. We need to go further and faster at it. April is coming up soon, and then we get into the Assembly elections. Therefore, I worry that some of the things that he has brought forward in his paper may not see the light of day because, obviously, there is a legislative backlog as well. I hope that that is not the case.

Dr Aiken: Thank you very much indeed.

Miss Dolan: Thank you, everyone, for coming in. I have just one quick question. Most other questions have been answered through the session. You say that businesses are nervous about returning information to LPS: as representative bodies, what can you do to increase engagement and returns and build that trust and confidence in LPS?

Mr Neill: I will jump in there, because I have a lot of involvement in this. We need a model that businesses can see as fair. If that formula was fair, there would be no problem. It is purely that they know that, if they engage and put in their accounts, the model will crucify them. That is the bottom line. I am in this job far too long, a lot of people would say, but, that whole time, we have tried to get that message through and, particularly since COVID, it has been exaggerated incredibly. Our turnover — that headline figure — has shot up, purely because of the cost base that we now face.

Ms Gault: Your point and Steve's are a really good case of hindsight, which is a wonderful thing. Had this been flagged up and dealt with, maybe in November, we would not have found ourselves in this situation. We are a small contributor, and maybe that was why it was glossed over. With hindsight, we could have worked our way through it. There would have been a transitional relief scheme that could have worked to remove that burden and smooth out the curve. We have spent quite a bit of time engaging a rates expert and getting a reduced rate for members, if they want to get advice. That is important.

The bigger picture in this is that we have to come up with a methodology that is simple for people to return. It should be easy to do and, if you have multiple businesses, you should be able to pull data out. A number of people do not realise that you could have five businesses, one of which is an accommodation business, that all feed into the same P & L, which means that it is quite difficult to pull that data out. There is work to be doing to restore some sort of balance in the system, and we have work to do to ensure that the methodologies are looked at and adapted in a way in which members find more comfort and are confident that they will get a fair deal.

Mr Neill: I will come in to finish that point. The process has highlighted how fragile the industry is. There are so many people who are subsidising their hospitality businesses out of their own pockets. We got to a point at which the size of the increases and the current state of the industry collided, and there was nowhere to go.

From our perspective, Jemma, we were very clear in all of our communication with our members that they should fill in the forms. I take what Colin and Janice said. We have helped a lot of our members by getting rates experts in to help and assist them. It strengthens their case if they have put the forms in and carried out the process. We were very clear about that. When we got the brief from LPS a few weeks ago, we saw that the figures showed that 40% of the retail sector had responded. That is quite a good figure and is a bit more than our colleagues in hospitality and hotels. We continue to say, "Please put your forms in, and, if there is a problem, let us know". We were very geared up to assisting members with the current or former Reval — whatever you want to call it — and making sure that, if they wanted to appeal, we would help them to do so. In the last Reval, we had a good track record in getting appeals upheld. That is what we were focused on.

Miss Dolan: That is fair enough. Thank you.

Miss Hargey: Thanks very much for coming in and for your evidence. Following on from the last point, in its evidence to us last week, LPS said that it has not come up with a better or fairer methodology. You have all raised the issue of methodology. We are dealing with very different sectors, and tension can be created between amongst them. In looking at the methodology and the next piece of work, have the sectors, and the representative bodies in the sectors, including those outside hospitality, been talking? Do you believe that there is commonality and areas that you can agree on for an agreed methodology?

Mr Neill: With the turnover methodology, it is down to the formula that is behind it. I hope that we can bring evidence to show that the formula now no longer produces accurate figures for what is classed as a "fair and maintainable trade", which is what the NAV is based on. This has been a very fast process, and we are keen to engage with other sectors. You would be a fool to think that you are not due to pay your fair amount of rates. It is about finding something that, in our sector, you can pay. Labour, which is now in government in the UK, had in its manifesto that it would change the formula where the overall rateable value is based on a property model. The big problem is what you put in its place. That is the 10 billion-dollar question. If somebody can come up with that, I want to copyright it and take a share of the royalties. Particularly on the receipts-and-expenditure turnover model, alterations can be made. They are not of a scale that they will impact the whole rate base that much. We are a small part of the rate base. It is time that we look at whether everybody is paying their fair share.

Ms Gault: There are four sectors that use the method that we use: car parks, cinemas, us and petrol stations. There are things that we can do behind the scenes to tweak it. There are mitigations that we can look at. In the longer term, people will be keen to see the methodology changed and simplified. That will mean that you can budget better. In the next three years, the pound's rate might change, but if you knew what it was, you could cover your implications. There is also a question around investment. That is a big thing. If you have a 100-bedroom hotel and you buy 100 beds, that is £100,000. That is a message that we are keen to get across. Being wed to turnover as a stand-alone metric is not a good idea. It is one statistic. We need to have stuff sitting underneath that that is easy to adapt and comes up with a more equitable system. The key thing for us is fair maintainable trade. Being maintainable is really about sustainability. This is an industry that you want to sustain; you do not want to have derelict buildings that were formerly hotels, pubs or restaurants or, for that matter, retail premises. That is an important part of it. It has to be something that is workable and transparent for everybody.

Miss Hargey: My other question is about societal shocks. COVID was an anomaly. It played a part when you were last assessed. The previous anomaly was in 2009-2010, after the financial crash. Can we learn from that, now that we are experiencing more frequent societal shocks that have an impact on different sectors at different points? Beyond the methodology, are there other things to look at? Have you identified recurring global events? Are there societal shocks here that have a global impact? How can we mitigate those in future? Are we talking about interim reliefs, or are there other aspects of the methodology or the structure more holistically that we could change in order to ensure that we are future-proofing?

Ms Gault: In part, we have to wait for the Minister to come back on some things. We have been through 9/11, SARS and COVID. A number of jurisdictions have introduced a capping system, which allows you to smooth the curve. That is one way of doing it. The transitional relief model is another way of doing that. It has been deployed very well in other areas, and it could work. We need to see the Minister's longer-term plan.

In reality, the Reval should come back out in November 2026, which is a mere nine months away. We think that that is a very short period of time. I said to somebody that that is the gestation period of a small human. We, unfortunately, do not want to be in the gestation period of an elephant which, I believe, is 18 months. We really need to make sure that we have something in place. The starting point for us, however, is that we will look at some solutions, but in order for us to bring those forward, we need to see what the Minister's plans are. Is Reval2026 halted? Is it going to be reapplied with some new metric in it, or is it going to be shelved, leaving us with valuations from Reval2023? Those are questions that we, unfortunately, cannot answer at this moment.

I know that the Minister has been thinking about things. It may be that the Department is taking time to work with LPS to look at how this might translate in future. That is an important thing for all of us. We certainly have had a number of discussions between the different elements of our industry and on different ideas. Until we see what the plan is in the short term, however, there are two very big questions: what happens for 2026 to 2029, and what happens after 2029? Scotland is doing a review. English hotels' rates increased by 76%? However, that 76% was multiplied by 43p, which meant that their rates did not go up that much. They also had a cap of 30% on their increase. All of a sudden, they were a totally different position from us. If you have a Hilton in Manchester and one in Belfast, they are really not comparable in any way. The model in England had a reduction in the rate pound, a capping of the rates bill and transitional relief. That was one way of looking at it. Again, that is a small sector, but we need to look at how that could be supported. That is our point: if we have only nine months to do this, it sounds like a long time, but it is not; it is a snapshot.

Mr Roberts: In one sense, we have articulated the need for the small business rate relief scheme to be changed and targeted towards leisure, independent retail and hospitality. That is the model in England that Janice referred to, and it targets the relief to the businesses that are still the pillars and mainstays of the high street. The current small business rate relief scheme is welcome, and the Minister is considering extending it to £20,000 NAV. However, the issue is this: there are lots of businesses that get it but do not need it.

My office in Ballyhackamore gets it. I may get in trouble for saying this, but I understand that MLA offices also get it. Would it not be better for the Minister's pot for small business rates relief to be targeted towards the businesses that need it the most, rather than giving it to businesses that do not need it? That is not about picking winners. The reality is that the future of our high streets is still going to be retail, hospitality and leisure. They are still going to be the mainstays. Our view is that the Minister's various consultations should be about a targeted approach to the small business rates relief scheme. Money will be coming in as a result of phasing out the vacant property rate. You could also look again at reintroducing something that Sammy Wilson did when he was Minister, which was about big, out-of-town retail of over 500,000 square feet. You could reprofile the rating system by way of a lot of the reliefs in order to get the outcomes that you want. I still think that we need to have an open and honest discussion about the methodology of the Reval. We cannot come back and do this every couple of years.

The other thing is this: are we going to have Reval2026 2.0? Has Reval2026 been shelved? Are we going to have reductions in three years' time? It would leave a significant gap if this is picked up again in the new mandate. Then, you are going to have a higher cliff edge, because in that time, lots of businesses will have increased in size. We had a valuation 10 or 12 years ago; there was a gap there.

Miss Hargey: It was in 2009-2010.

Mr Roberts: Yes, that is right. I was in the same position as my two colleagues were at that time; I was not long into the job. It had been so long since there had been a Reval that the world had changed several times. Whatever happens next, if we leave it for another three years, I worry whether we are going to have more cliff edges. Are other sectors going to be sitting where my two colleagues are sitting now? That is where we need to engage with the Minister and see what the next steps are. We believe that we can do that best through a new structure or a new standing group that can work through problems, advise the Minister and deal with problems as they come up. Janice made the point that if this had come out in November, we might have had a bit more room to manoeuvre.

Mr Neill: You mentioned shocks. We get global shocks and ones that are related to us. One of the big things is having a system that can look out and see what industries are impacted by those shocks. In hospitality, we live at the very end of discretionary, disposable income. If money is tight, for whatever reason, whether that is due to a financial shock or the cost of living or whatever, we are the first to feel the pull back. You go from, "Let's go for a meal on a Friday night" to "Let's get a meal deal from the supermarket". We are very vulnerable to that space.

I am really supportive of the fact that we have a unique industry. There are very few places that have locally owned businesses. The profitability of those businesses is nowhere near that of the big chains. Let me give you an example of a pub chain. I have nothing personal against Stonegate, which has 4,600 pubs. We have 1,100 pubs here. Nobody here can match that buying power, because most pub owners here own one or two pubs. That buffer or profit margin is never there for them to absorb a shock. We are operating in a world in which we cannot pass on the costs. We know that our customers do not have the money, so we keep suppressing the profit margins. It is about finding a model that gives us a standard and allows us to have a fair rating model, along with something that overlooks that and is continuously scanning for shocks and identifying what sectors have been hit. It may not be our sector; it may be exports, because of the challenges posed by America or whatever. It needs to be able to react.

I appreciate that rates cannot solve all our problems because a lot of taxes come from Westminster. The problem that we have is that after Westminster takes what is theirs, what can we afford to pay with the money that we have left? The adjustments after COVID were very welcome, and we made that point, but GB had two years at 70% relief and a year at 40% relief, and it had much bigger systems to weather the storm, so there needs to be something overarching. You make a valid point about the shocks. Who have they hit, and how do we mitigate them to make sure that those businesses survive?

Miss Hargey: Janice, you spoke about certainty and having a lead-in time, and doing more ongoing Revals is part of that because of the gap after the financial shock. The next one was not until 2015 or 2016, so that was a huge gap. Aligned to that is the importance of having a three-year Budget. An additional £10 million is proposed in that for small business rates relief. There are the ongoing consultations, and, as you say, there are a number of different parts to this. What is your view on trying to get a three-year Budget? Hopefully that will happen before the next election, as you said, Glyn, because focus will shift the closer we get to it. You touched on the recent consultation on small business rates relief. What headlines would you like to see coming out of that?

Mr Neill: No business could ruin on a yearly budget. I look at you all and think, "How can you?". I have seen it with government bodies that are never sure what money they have until the end of the year, which means you cannot buy well and you cannot plan. A three-year Budget is essential. That is my opinion from a business point of view. I appreciate that there are more complications from a Government point of view, but I cannot see how you can budget over one year.

On the small business rates relief, we need to start using our rates system to back the businesses that we want to grow. That sounds cruel but if you are a private business, you invest in the bits of your business in which you can get growth. It should track the Programme for Government. If you want to grow small businesses because they are the backbone of the economy, the question then is how do you help them to do that? In England, the rural pub gets 100% rates relief because they see its value a community asset. I appreciate that x pounds in Barnett consequentials does not buy the same rates manoeuvrability here as it does in GB, but we need to get more focused in that space, and, as Glyn said, be more targeted with the small business rates relief.

Ms Gault: Take the tourism market here: if we have a three-year plan, we can buy media for three years, which allows us to promote. We find ourselves in the unique position of being attached to a country in which the VAT rate is 11% or 7% lower than ours. However, if we have the ability to buy and promote, that is important, particularly with regard to what tourism can bring. A three-year plan would smooth it out, and people would know what they have. We would not have a rush at the end with what we refer to as "March money", where we try to spend on things that may not be effective. We would support a three-year plan, which would also mean that businesses could plan and say, "Well, this is happening". For the Assembly, it allows you to have the Budget set, so it is one more thing off the agenda, which allows you to concentrate on other things.

The small business rates relief hits probably only a couple of hotels, but for us it is about the ecosystem. Do you have a coffee shop to go to or a local retailer in which to buy your paper? I gave an example earlier of a retailer who sits opposite a large hotel. He told me that he loves people coming because — and I do not say this in a sexist way at all — the husbands were dragged into his shop and forced to buy new clothes simply because they were there. It is important that people can go out and have something to see and do. If that generates more business, then that is good, but for us a settled three-year Budget would allow you to concentrate on other things, and allow the agencies that support us — Tourism Ireland and Tourism NI — to have enough budget to do that.

Mr Roberts: A multi-year Budget is a no-brainer because of your priorities in the Programme for Government. There is also the investment strategy. That is so important. That is why, when I reflect on two years of restoration, I say that we need to have a much more delivery-focused and nimble Executive that do stuff, and a three-year Budget is so important to the delivery process. The one challenge that needs to change is the silo mentality of the Executive. It is probably the most frustrating thing in dealing with this. Individual Ministers are doing some good things, and I have highlighted what Minister O'Dowd is doing in his Department but, as soon as you go across to a Department that is headed by a Minister from another party, that is where the problem lies. That lack of joined-up approach absolutely needs to change.

The Chairperson (Mr O'Toole): That is a very good and important message on which to end the discussion. I suspect that some of the people who are watching will say that it might have been somewhat better had the Minister and the team thought of some of those things before the revaluation was published. I know that there was some more tentative engagement with people ahead of the revaluation's publication. Did the Minister, the team or LPS indicate then that they would be thinking about either transitional relief or, indeed, using the small business rates measure that the Minister wants to bring forward to offset the pressure of the revaluation? Was that indicated ahead of the publication?

Mr Neill: There were conversations on the consultation for the small business rates relief and, indeed, we got an economist to do some modelling for us. As I said, I am a great believer in data. However, I do not think that the two were really connected. There may have been peripheral conversations about how one would work alongside the other.

As I said, we expected an increase: it was just the shock of its scale.

The Chairperson (Mr O'Toole): Its number.

Mr Roberts: There were no discussions that —. The transitional relief was not there. We have raised that in successive Revals because obviously it is unfair that, if you have a small business that has processed a significant increase, you will lose 20% of your small business rates relief. That is unfair, and it is where I think particularly the transitional arrangements or the traditional transitional fund, would assist them. However, that was not raised at any time with us.

Mr Neill: I do not think that anybody is to blame. It is really that the process took over and we need to find a way to sort that out.

Ms Gault: We saw the list on the Wednesday and it came out on the Thursday. I can understand why you would not want to show the list three weeks out because there is a question of leaks. However, we saw the list on the Wednesday and the percentages. The LPS sent us the full list the next day when it was released, with all the percentages on it so that we could see it. There certainly was an informal indication of, "This is going to be significant". "Significant" for us was 30% plus 15%, which is 45%; we were not thinking of 30% plus 53%.

The Chairperson (Mr O'Toole): Essentially, you were expecting an increase, but not that big of an increase.

I take your point, Colin. You are right that blame is never productive, notwithstanding my other role in the Assembly. Accountability and responsibility are very important so we will, arising from this meeting, want the Minister and the Department to keep us, as a Committee, abreast of the next steps. We may want to hear from your groups in the months ahead, either in written or oral form, as we understand what is next. Please keep in touch with us on that over the next couple of months. It may be useful for us to hear more, particularly if you are engaging further, hearing more from the Department and LPS and fleshing out your proposals. Though it is paused, it is a fast-moving pause, if that does not defy the laws of physics.

Thank you very much.

Mr Neill: Thank you again for the opportunity.