Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome Andrew McAvoy from the Department of Finance. We are probably more pleased to see you than you are to see us, Andrew, given the past month or two.

Mr Andrew McAvoy (Department of Finance): I would not say that.

The Chairperson (Mr O'Toole): We are very glad to have you with us. Andrew is the director of rating policy division at Land and Property Services (LPS). He is here to brief us on the orders. Ancillary issues may come up, but this session is primarily about the three statutory rules (SRs). Andrew, do you want to talk us through the orders?

Mr McAvoy: I will talk about each in turn. As you say, Chair, there are three statutory rules for the Committee to consider. The first is SR 19/2026, which is the Rates (Regional Rates) Order (Northern Ireland) 2026. The order is due to be debated next week, on 10 March, in the House. The decision on the uplifts for 2026-27 was taken at Executive level on 12 February. The regional rate decisions were decoupled from the wider Budget process, as has occurred in previous years, so as to facilitate the issuing of rates bills on time in April.

There are two parts to the order. The first is the 5% uplift in the domestic rate, while the second is the 3% uplift in the non-domestic rate.

Both uplifts are the same as the regional rate uplifts that were put in place in 2025-26 and are also the same as those outlined in year 1 of the draft multi-year Budget. As I said, the Executive agreed to that on 12 February.

On the revenue that will be generated from the measure, £900-plus million is associated with the regional rate in total, and the combined value of the annual uplifts is £47 million.

The Chairperson (Mr O'Toole): There will be £47 million generated from the uplift.

Mr McAvoy: From the 5% and 3% uplifts.

The Chairperson (Mr O'Toole): Andrew, in the past, you said that 0·5% is worth about —. Remind me now.

Mr McAvoy: It has probably changed slightly, but a 1% uplift on each part of the tax base is worth roughly £3·5 million to £4 million.

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

Mr McAvoy: That is the first order. The second one for the Committee to consider is SR 20/2026, which is the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2026. It is a statutory rule that effectively continues the Back in Business scheme. It will extend the scheme until the end of the 2026-27 rating year. I remind Committee members that, under the current scheme, an incoming occupier of long-term vacant retail space, which is defined as space that has been vacant for 12 months or more, will see a 50% reduction in their rates liability for the first two years of trading.

The Committee may remember that the scheme was reintroduced after a spell of not being in place, owing to the Executive's not being present. The scheme came back in around May 2024. By way of an update for the Committee on what has happened since then, the scheme, although relatively modest, has, as of today, facilitated the operation of 113 new businesses across the 11 council areas, and that has saved those businesses £600,000 in rates liability. You may recall from previous evidence sessions that I said that, as the scheme embeds itself, it starts to grow, and we are starting to see that happen now.

Linked to the statutory rule — you may recall that I mentioned this previously — is the work that is being done with councils. In December 2025, a new group was set up that will be chaired by me and members of the Society of Local Authority Chief Executives (SOLACE). It will work on a cross-council basis to increase the publicity about available support in the rating system and work with council schemes that may be put in place to keep driving growth in the scheme. That is not linked to the provisions in the order per se, but it does relate to the level of uptake of the scheme.

The final SR for the Committee to consider today is SR 22/2026, which is the Rates (Exemption for Automatic Telling Machines in Rural Areas) Order (Northern Ireland) 2026. That is an annual statutory rule. A relatively small amount of support is provided under the scheme, and it applies to a small number of ATMs. That is largely because a Supreme Court decision on the valuation treatment of ATMs. Most of them were removed from the valuation list entirely in previous years. The provision continues to apply to a small number of machines. The feedback from the sector and the industry is that, although the rates support may not incentivise anybody to install a brand-new ATM, the businesses that have ATMs are availing themselves of the scheme. That helps sustain the service, which is an issue that the Committee is already aware of from its separate inquiry.

The Chairperson (Mr O'Toole): May I ask a question on that point?

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): Based on the court judgement that you mentioned, one of the asks has been to make all ATM rates exempt. Would doing that be legally problematic?

Mr McAvoy: It could be done through the mechanism in the small business rate relief (SBRR) scheme, because this enabling power allows it to be done for rural areas only. For ATMs elsewhere, it could be done through that mechanism.

The Chairperson (Mr O'Toole): Would primary legislation be required?

Mr McAvoy: No. It could be done —.

The Chairperson (Mr O'Toole): It could be done by secondary legislation. How much would it cost?

Mr McAvoy: It would not involve a great deal of cost. On average, it would be about £1,500 a machine. As I said, most of them are valued now within the —.

The Chairperson (Mr O'Toole): Can you differentiate between ATMs that charge and ones that do not charge? Presumably, you cannot.

Mr McAvoy: No.

The Chairperson (Mr O'Toole): Fair enough. Go ahead.

Mr McAvoy: That is the third SR. All three SRs will all be debated on 10 March to make best use of Assembly time. That is all that I have to say on the provisions at the moment.

The Chairperson (Mr O'Toole): That is really helpful. Thank you. Members, as always, indicate should you wish to ask a question. For clarity, Andrew, The orders are based on the revaluation of 2023, which happened in 2021. TI say that in case anybody is watching and wants clarification on that.

Mr McAvoy: On the wider decisions around the revaluation, legal correspondence is ongoing. It is therefore important that I clarify two points. The 2026-27 rates bills will be issued on the basis of current values in the current lists, so Reval2026 values will not be applied for 2026-27. Likewise, in the context of the regional rate and the council rates that were struck over the past month or so, all of that has been done on the basis of the current list as well. Those are two points that I think it is important to clarify, particularly for the Rates (Regional Rates) Order.

The Chairperson (Mr O'Toole): On the overall numbers, the multi-year Budget assumes the 5% uplift, and the Executive have now agreed that 5% uplift.

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): I am not asking you to give me every bit of policy detail, but was advice given on potentially having a higher rate uplift or a lower rate uplift?

Mr McAvoy: For the regional rates?

The Chairperson (Mr O'Toole): For the regional rate.

Mr McAvoy: The regional rates paper that went to the Executive gave only the first year's rates decoupled from the draft multi-year Budget process. It was put to the Executive on that basis. Alternatives were not looked at.

The Chairperson (Mr O'Toole): There was therefore no alternative proposed to say, "If you put it at 6% or 7%, you will have this additional spending power. If you put it at 3% or 4%, bill payers will save this much".

Mr McAvoy: No. What is factored into the regional rate decision in any year that the Executive are looking at it is the need to balance revenue-raising capacity through the rating system and what people can afford to pay. That is paramount in the Executive's mind when they are making that decision, but it was not explicitly set out in the Executive paper.

The Chairperson (Mr O'Toole): Is there any concern now about the affordability of the policy? It will not necessarily be the biggest driver of household expenses, but it is the one over which the Executive have some control. Based on global events, we are now — we all hope not — facing another squeeze. The price of home heating oil, for example, is rocketing. Has any advice been asked for on whether that is an appropriate above-inflation rise now for households, or are there any other means through the rating system that can be used potentially to plan for alleviation or support that will need to be given in the months ahead?

Mr McAvoy: Yes. On the household side, the business side or both?

The Chairperson (Mr O'Toole): Both, I suppose. Start with households.

Mr McAvoy: In the context of global events, it is probably a bit too early to look at the effects of the increase. I know that the events of the past couple of days have seen rises in certain energy costs, but it is probably too early to say what the long-term effects will be. We have been in this position before. Officials in my team on the policy side have in the past had to respond to events such as the financial crisis of 2008 and the pandemic.

For households, I will say first that we have the most generous levels of means-tested support of any of the four jurisdictions of the UK, so a safety net is built into the system. As rates bills go up, that support tracks the increase in them.

That is one element.

The other element to consider is whether the rating system is the vehicle for providing support above and beyond means-tested support. Any discussion on that applies to the business side and the domestic side equally. At the end of the day, this is a taxation system. If we want to intervene to incentivise certain behaviours or to provide support to people, we will probably need to look at that across the board and ask whether it is always the best means through which to do so.

The Chairperson (Mr O'Toole): Do you mean looking at whether the rating system is the best means of providing support to people?

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): Are you talking about doing that through, for example, the rates support grant (RSG)? What do you mean?

Mr McAvoy: The rates support grant applies at a council level.

The Chairperson (Mr O'Toole): Yes, but it is a means of mitigating the impact of the cost of rates in general.

Mr McAvoy: Yes. In the past, the rates support grant has been used to intervene to provide support through the rates system to alleviate hardships elsewhere, such as those experienced during COVID. Another example is the small business rate relief scheme, which was put in place as a response to the economic downturn after the 2008 financial crisis. At those times, however, other Departments put in place other measures. The RSG is therefore not the only show in town when it comes to intervening and providing support. There have been grant mechanisms, and financial assistance has previously been provided under Executive Office powers.

The Chairperson (Mr O'Toole): I have a final question before I bring in other members. It would be remiss of me if I were not to ask where we are at with the next steps on revaluation. You alluded to this earlier, but are we now to expect that there will not be a revaluation until 2027?

Mr McAvoy: No decisions have been taken on that yet. The Minister announced on 29 January that he was pausing Reval2026. For me, the most important thing to know was what is happening in this rating year, because we had to do the Rates (Regional Rates) Order, and the expression of the poundage would have altered depending on whether a revaluation was going to proceed. Revaluation is revenue-neutral. It makes no difference to the amount of money raised, but it does affect the expression of the poundage in the order. That was therefore a critical issue. It was the same with the council rate-setting process.

The Minister met sector representatives from Hospitality Ulster, the Northern Ireland Hotels Federation (NIHF) and Northern Ireland Food To Go Association (NIFTGA) on the date of his announcement and outlined what he wanted from them as next steps beyond the turn of the financial year. I cannot say too much more about other sectors because of the ongoing legal correspondence.

The Chairperson (Mr O'Toole): OK. At the minute, what happens next is wide open. There is no decision yet on whether you will simply stick with the same model but just not implement it for a while or whether you will completely revisit the basis on which revaluation is done.

Mr McAvoy: The Minister has not made any decision about that.

The Chairperson (Mr O'Toole): No decision has been made. OK. That is helpful to know. Presumably, a decision may not be made. If you stick with what happens at the minute —

Mr McAvoy: That is one option.

The Chairperson (Mr O'Toole): — it can be left open until, presumably, a decision needs to be made for the next financial year on whether to issue bills for 2027-28 on the basis of what happened before.

Mr McAvoy: Yes. There is a range of considerations and options. No decision has been taken yet.

The Chairperson (Mr O'Toole): One option could be simply to leave the old valuations in place. Is it still an option to implement Reval2026 at some point but with sector-specific mitigations or reliefs in place?

Mr McAvoy: It is always possible to do that, yes. I have had no indication from the Minister about what he wants to do in that space. As to whether what you ask is possible, my answer is that, yes, it will be possible to publish the list, have it operative for April 2027 and bring in supports. If we do that and bring in support interventions for certain sectors, that will mean that the revaluation process in the round is not revenue-neutral, because, alongside it, we will be spending a lot of money on transitional support. That is therefore a consideration. It is a question of from where the money will come to provide that support.

The Chairperson (Mr O'Toole): OK. We do not know yet, so we will wait. Is there a timeline for when we will know?

Mr McAvoy: It cannot drag on forever. At the moment, our number-one priority is to get rates bills out for April.

The Chairperson (Mr O'Toole): OK. I will leave it there for now.

Ms Forsythe: Thank you for attending, Andrew. I was at the Economy Committee this morning, and we had representatives of all those sectors in to talk about Reval2026. They are keen to engage. The Economy Committee agreed to engage with the Finance Committee — I obviously sit on both — about taking a joined-up approach. The questions are the same, as are the groups with which we engage, including LPS. The valuation model has a wider economic perspective. Hopefully, the two Committees will engage a bit more on that.

When do you expect to see our rates bills coming out?

Mr McAvoy: On the normal date. The bills will start to go out on 1 April.

Ms Forsythe: Super. Thank you. You said that, since the restoration of the Executive in 2024, 113 new businesses have availed themselves of the Back in Business scheme, which has saved them almost £600,000.

Mr McAvoy: Yes. That saving is across every council area.

Ms Forsythe: It is good to see the regional spread and the real-time impact and to be able to quantify the savings achieved.

On the Rates (Exemption for Automatic Telling Machines in Rural Areas) Order (Northern Ireland) 2026, Matthew and I sponsored a report yesterday from Retail NI on the revitalisation of post offices. It is promoting awareness of their services and of access to cash. Has any consideration been given to linking that order with post offices in rural areas?

Mr McAvoy: The consultation on small business rate relief options closed on 29 January. The option in the consultation to increase the threshold would significantly benefit post offices. The National Federation of SubPostmasters (NFSP) and Retail NI fed into the consultation process.

Ms Forsythe: It would be good to see that come through. I appreciate the piece to extend the number of rural ATMs. I represent South Down, and ATMs provide a very valuable service in our area. We like our cash in my corner of Northern Ireland.

Mr McAvoy: It is a small but important measure to bring in every year through the affirmative resolution procedure. The feedback that we get is that it is important to retain ATMs, and the order could be material to someone's decision not to remove an ATM.

Ms Forsythe: Thank you.

Mr Kingston: Thank you, Andrew, for the information. I appreciate that SR 20/2026 extends the life of the temporary rebate. Can you tell us a bit more about the criteria involved? Does the order apply to every vacant property that has not previously been charged rates, or are there criteria to be met?

Mr McAvoy: Normally, if commercial property is vacant, there is a 50% charge, and the Minister is looking at increasing that. A number of years ago, when we developed the model, we looked at how we could incentivise occupation of vacant properties. We wanted to restrict the scheme to commercial retail space, because there was a risk of displacement. For example, companies could move office overnight and continue to move in order to be perpetually in receipt of the 50% relief. The scheme is therefore restricted to vacant commercial retail space. That is not to say that a retailer has to bring the space back into occupation. It can be any sort of business.

A long-term vacancy is defined as being more than 12 months. Again, that is a mitigation against displacement. Six months was considered too short a time, so we decided on 12 months. That is the right amount of time, because the revenue losses are treated as notional. If such properties were to remain vacant, we would get a 50% liability against them. Given that they have sat for 12 months or more, it becomes less likely that they will ever be occupied again, so they start to fall into the category of being vacant for the long term. Any incoming occupier will receive 50% relief for the first two years of trading. The rates liability means that start-up businesses that move into empty units will get a boost in their first couple of years of trading while they try to establish themselves.

Mr Kingston: Vacant properties can come back into use for any business activity, is that right?

Mr McAvoy: Yes. They do not need to be occupied by retail businesses.

Mr Kingston: If the premises were being converted into accommodation, are you saying that the relief would not apply?

Mr McAvoy: It depends. Are you thinking about its becoming a hotel? It could not be used for domestic accommodation, because it would then be revalued on that basis.

Mr Kingston: What if it were becoming private rented accommodation?

Mr McAvoy: No, it would need to be for commercial use.

Mr Kingston: OK. Thank you.

The Chairperson (Mr O'Toole): No one else has indicated that they wish to ask a question. Andrew, I ask that you keep us abreast of any developments in relation to the revaluation. I presume that you are getting a lot of correspondence overall, leaving aside the pending legal matters.

Mr McAvoy: I am over the rating policy, which is the Minister's new rating policy developments and the legislation that he will be taking forward. At the moment, the correspondence is mainly going to the Commissioner of Valuation from the sectoral bodies and also through professional bodies, such as chartered surveyors. They want to engage as part of the process. Yes, we will keep you —.

The Chairperson (Mr O'Toole): Is the thrust of their point, "Go ahead with mitigations or completely overhaul the system, but do it in the way that we would like you to do it", or is it, "Just get on with it either way"?

Mr McAvoy: It would be stating it too strongly to say that they are saying, "Overhaul the whole system". There is the issue of frequency of revals being a good thing within a property tax, but then it is about the mitigations that you apply alongside that. Those are the types of issues that people are —.

The Chairperson (Mr O'Toole): Obviously, people want more frequent revals, but, in a sense, between 2021 and 2024, even though revals were frequent, a very big thing — COVID — had happened in the meantime. That rendered the regularity of the three years —.

Mr McAvoy: On this one, it is a move away from COVID, but COVID was a generational issue in relation to taxation systems across the UK. You saw the same in England, Scotland and Wales: moving away from the COVID discounts created issues there as well.

There is one other thing: small business rate relief. We will come back to you on that as well. The consultation closed on 29 January, and advice has been provided to the Minister on the consultation outcomes, but the wider process is tied up with the multi-year Budget process. During the ministerial statement yesterday —

The Chairperson (Mr O'Toole): He may have done. I do not have the Hansard report in front of me.

Mr McAvoy: — the Minister referred to the fact that he had already set aside £10 million for changes to the scheme in the draft Budget for 2026 to 2029-2030, and he said that he believes that increasing the finance for the small business rate relief scheme would be money well invested and that he will be making that case to the Executive. Once there is any development at Executive level, I will —.

The Chairperson (Mr O'Toole): But that goes alongside —. There is the small business rate relief —.

Mr McAvoy: There will be an SR, which has already been through the Committee, to extend the scheme during its normal run, and there will then be a decision at the Executive to enhance the scheme further on foot of the consultation.

The Chairperson (Mr O'Toole): Is that connected to the Minister's mooted move on vacant properties?

Mr McAvoy: No. The £10 million was set aside in the draft multi-year Budget already for —.

The Chairperson (Mr O'Toole): He has said that he wants to do that too.

Mr McAvoy: He has, yes.

The Chairperson (Mr O'Toole): But that is not an active decision with the Executive.

Mr McAvoy: No.

The Chairperson (Mr O'Toole): That is just a statement of his personal preference.

Mr McAvoy: He will be going to the Executive with that, but this is a separate thing. The small business rate relief scheme is a more advanced process.

The Chairperson (Mr O'Toole): The vacant property relief would not release the money for small business rate relief, because the small business rate relief would come first.

Mr McAvoy: It will potentially be used to do enhancements in the future in terms of additional revenue.

The Chairperson (Mr O'Toole): The extra spending on small business rate relief will come before you realise any money from vacant properties.

Mr McAvoy: That is correct.

The Chairperson (Mr O'Toole): Have we made any progress on the domestic max cap or early repayment? Is that still in the Bermuda Triangle?

Mr McAvoy: It is too late for this year, obviously.

The Chairperson (Mr O'Toole): Obviously it is too late for this year.

Mr McAvoy: The £10 million set aside in the multi-year Budget is for year 1 of the multi-year Budget, and there will then need to be discussions about how that is funded in future years.

The Chairperson (Mr O'Toole): That £10 million is for the small business rate relief?

Mr McAvoy: Yes.

The Chairperson (Mr O'Toole): OK. But then the max cap and the early repayment could not be implemented —. How much does that —? That is not particularly raising very much money.

Mr McAvoy: It raises —

The Chairperson (Mr O'Toole): It is £6 million.

Mr McAvoy: — about £9 million for public services, but part of that goes to the councils.

The Chairperson (Mr O'Toole): The earliest that that could possibly be realised in a multi-year Budget is 2027-28.

Mr McAvoy: Yes, at this stage.

The Chairperson (Mr O'Toole): But still no decision has been made on it.

Mr McAvoy: No.

The Chairperson (Mr O'Toole): I think that it was first announced in late 2024, or it was indicated in late 2024 that it was going to happen.

Mr Kingston: Can you confirm that you said that £10 million was set aside for one year?

Mr McAvoy: It was set aside in the draft multi-year Budget for the first year of the Budget.

Mr Kingston: So, when you said "2026 to 2029-2030", it is not for the three years?

Mr McAvoy: It is not for three years; it is just for the first year.

The Chairperson (Mr O'Toole): You will need to then find money in the additional years. OK, you just do it for one year. That is interesting. That is helpful. Thank you, Andrew. No one else has indicated that they wish to ask a question.

We have three statutory rules that we need to discuss. I will go through them in very brief terms, because we go through them every year. Apologies, but I did not go through the entirety of my notes, because we get these —. The Clerk's cover notes for each of the three statutory rules are in members' packs.

The Committee Clerk: We can just go to the Question.

The Chairperson (Mr O'Toole): I will go to the Question in a second, but, for the purposes of completion, I will tell members that they have notes on the three statutory rules in their packs. For clarity, the first is the Rates (Regional Rates) Order, which sets the amounts. The second is the Rates (Temporary Rebate) (Amendment) Order, which allows "back in business" to continue. The third is the Rates (Exemption for Automatic Telling Machines in Rural Areas) Order, which extend that rates exemption. I will not go through all the pages. You can find them yourselves. Hopefully, you have read them all, but we do them every year. I will ask members if they are content with the question. It may be that members wish to signal their dissent. I will allow members the opportunity to do that without forcing the Committee to go to a formal Division unless it is really necessary that we have a recorded vote.

Are members content that the Committee for Finance has considered SR 2026/19, which is the Rates (Regional Rates) Order (Northern Ireland) 2026, and recommends that it be affirmed by the Assembly?

The Chairperson (Mr O'Toole): I will register that I am not content. I have a different position, which I have put. I do not think that it needs to be recorded, and I do not think that we need a formal vote.

Are members content that the Committee for Finance has considered the SR 2026/20, which is the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2026, and recommends that it be affirmed by the Assembly?

The Chairperson (Mr O'Toole): Are members content that the Committee for Finance has considered SR 2026/22, which is the Rates (Exemption for Automatic Telling Machines in Rural Areas) Order (Northern Ireland) 2026, and recommends that it be affirmed by the Assembly?

The Chairperson (Mr O'Toole): All the SRs are scheduled to be confirmed by the Assembly on Tuesday 10 March.