HC Deb 10 March 1983 vol 38 cc1038-43 10.12 pm
The Under-Secretary of State for Northern Ireland (Mr. David Mitchell)

I beg to move, That the draft Rates (Amendment) (Northern Ireland) Order 1983, which was laid before this House on 22nd February, be approved. The order seeks to do three things; to require only one rate demand to be sent out to ratepayers each year, instead of the current half yearly billing; to allow discount for prompt payment of domestic rates only if the full amount of rate is paid as a single sum; and to provide for the partial exemption from rates of non-domestic hereditaments which straddle the boundaries of enterprise zones.

The provisions on annual billing have resulted from a package of proposals made by a team of officials working in consultation with Sir Derek Rayner. This team was charged with the task of considering ways of improving efficiency and reducing the cost of rate collection in Northern Ireland.

With regard to the frequency of rate demands, ratepayers are at present billed for their rates twice a year. The new proposal will mean that only one demand will be issued each year. This change will both reduce administrative costs and facilitate the introduction of our new computerised rate collection system—a beneficial side-effect is that annual billing will enable action for the recovery of arrears to begin earlier in the rating year and to take account of the amount due on a full year's rates. Similar procedures have been introduced by many local authorities in England and Wales, with a resultant reduction in costs and an improvement in their cash flow.

I assure the House that few ratepayers will suffer any inconvenience as a result of this proposal. They will continue to have the choice of payment methods which they have at present. For example, they will still be able to pay rates by monthly instalments, two half-yearly payments or by a single payment. To keep ratepayers informed of developments, I propose to publicise the new procedures fully during the first year of operation.

Article 4 of the new order modifies the existing discount scheme which currently allows a discount of 21½ per cent. to domestic ratepayers who pay their half year's rates within one month of the issue of the rates demands. This system is not cost-effective. In its report the Rayner study team recommended that discount be discontinued, and, when a previous draft rates order was published for consultation, it proposed to abolish the discount for domestic rates. That proposal was withdrawn for reconsideration in the light of comments and condemnation from elected representatives and from district councils during my visits to them.

The new proposals now before the House are the result of that reconsideration and provide for discount for the prompt payment of domestic rates only if the full year's rates are paid in a single sum.

When the draft order was published on 29 November 1982, it proposed a level of discount of 3½ per cent. However, I have re-examined the position in the light of further comments put to me, and as a result I have now raised the discount to 4 per cent. In arriving at this increased figure, I have also been influenced by the comments made during the debate on the order by the Northern Ireland assembly, which itself reinforced points put to me by district councils.

The level of discount allowed will be reviewed annually to see that it reflects the cost of providing the discount facility for ratepayers. In this connection, it is worth noting that only 7 per cent. of the rating authorities in England and Wales operate a discount system; and most of those allow it on the basis of a single payment for a full year's rates, as proposed in this order. During the debate on the draft order both district councils and the assembly commented on the availability of service for ratepayers following the introduction of the new procedures. I am, of course, fully aware of the need to avoid difficulties for ratepayers making payments and in dealing with particular queries.

The House will wish to know that arrangements have been made with the Post Office for ratepayers to make payments through the national Giro. Hon. Members will know that one of the problems facing sub-post offices in particular is that with changes in the payment of pensions, there is a potential reduction in their work load. We are concerned to ensure as far as possible that sub-post offices can remain a viable business proposition, because they play an important role in the community in addition to providing stamps and so on. Therefore, this is a helpful way of making potential business available to them. The cost of the transaction will be borne by the Department and will not be charged to the ratepayers. I have more than recovered the cost of that by discontinuing the issue of receipts for rate payments made by cheque.

If any ratepayer has an inquiry about the state of his rates account, it can be dealt with by a visit, telephone call or letter to any of the 13 continuing rates offices. Rates inquiries can also be made through any of the Department's district development offices, which are sited in the larger towns in Northern Ireland. We shall also arrange for staff to visit senior citizens requiring help over rebates or any other special difficulties.

The last of the points covered in the draft order is a bit lengthy and complicated in legislative terms, but the effect is simple—to remove a technical anomaly where the hereditament straddles the boundary of an enterprise zone. Provision is made for exemption from rates of those parts of a non-domestic hereditament lying within an enterprise zone. That brings Northern Ireland law into line with that in the rest of the United Kingdom.

The House will, I hope, recognise that the general effect of the order is to streamline rate collection procedures and to make them more efficient and cost effective. The changes proposed will form an integral part of our new computerised rate collection system. When the changeover is complete, savings approaching £1 million a year should be realised. I therefore commend the order to the House.

10.18 pm
Mr. Clive Soley (Hammersmith, North)

I shall not detain the House for long, but I have a few points to make. I recognise that the order stems from Rayner's recommendations to obtain more efficiency. However, I am a little concerned, because in a sense the Government's policy is always the same, to obtain efficiency at any price. The fact that they do not consider the unintended consequences of such legislation may be one reason why they continually get into difficulty over public expenditure. The Government create more unemployment through their quest for efficiency and by cutting public expenditure in general. But they still cannot keep public expenditure down, because, with a falling gross domestic product, the main factor determining public expenditure is the payments made to the unemployed.

The order involves the problem of job loss, particularly outside Belfast. What is the Minister's estimate of that job loss? What proposals does he have to deal with those who lose their jobs? Is he thinking of redeployment, retraining or simply of making them redundant? We should like some answers to those questions. If there are to be major changes in the economy, there must be plans for how to deal with unemployment. Although there have been a few small steps in the right direction in recent years, the Government still seem to be at the "Get on your bike and look for work" stage, which is not helpful to the economy of Northern Ireland.

I understand the issue of discount, but why are we sticking to the discount for annual payments only? The people who have most difficulty with paying are those who have to split their payments. Those are the ones who need the discount. I never cease to be impressed by the way the Tory party can get money back from the public without making them aware that they are losing it to the Tory Government. That is what seems to happen so often. There is a strong case either for accepting the Assembly's original recommendation of two discounts of 3½ per cent. or, if the Minister wishes to stick to his 4 per cent. mark, two discounts of 2 per cent. As I have already said, the people who have most difficulty in making ends meet are those who have to split payments.

Where will the computer hardware come from? My information is that it is being bought from outside the United Kingdom. Is that correct and, if so, has the Minister looked for possible alternatives in this country?

10.21 pm
Mr. J. Enoch Powell (Down, South)

I should like to make three observations on the order and on the Minister's speech.

First, my hon. Friends and I welcome what the hon. Gentleman said about the arrangements for payment of rates through post offices and about the maintenance of sub-post offices. That is said with particular warmth by a representative of a deep rural constituency where the Minister's remarks are particularly applicable. In that connection, the hon. Gentleman mentioned rate rebates and the visit to pensioners and others by officials, presumably of his Department or, at any rate, the rating service. There is some difficulty where rate rebates are separated from rent rebates. Where rent and rate rebates are dealt with together, relatively little difficulty arises. Although earlier today the Minister was good enough to say that he accepts the desirability of the rent rebates available from the Housing Executive being made even better known and more availed of than they are at present, where there is an owner-occupier and where, therefore, it is the rent rebate only, instances come to the attention of hon. Members of real hardship where the owner-occupier, often in difficult circumstances, fails either to be aware of the possibility of a rate rebate or to get it calculated properly. I welcome what the Minister says, but, recalling one of two of these cases, I wonder whether in sending out the rate demands some thought might be given to information on rent rebates and the way in which they should be claimed and calculated.

That brings me to my second point, which concerns the information which accompanies the rate demand. It will still be possible after this order for the ratepayer at his option to pay annually in two instalments or in ten monthly instalments. The fact that these possibilities are available is certainly not at present made known to the ratepayer on his rate demand. One simply receives a demand for the half year in the plainest possible form with an indication of the rebate available for payment within a month, but nothing else. So far as I know, there is nothing on the document of the rate demand which intimates to the ratepayer that there are alternative ways in which he can pay, though admittedly without attracting rebate.

It is only right and fair that the alternative ways of payment should be set out in all the rate demands issued, especially now that there is a choice between making one block payment with a rebate and paying in two moieties or in monthly instalments. I hope that the Minister will see whether that can be included with other information in the rate demand. I may have been mistaken, but I thought that the Minister said that the guidance and information on the new system would be given only once, on the occasion of the first year of operation. I see no reason why it should not be supplied automatically with the rate demand every year in a standard form covering all the points.

Thirdly, on the matter raised by the hon. Member for Hammersmith, North (Mr. Soley), let us consider the most favourable case of a ratepayer whose gross rate demand is for £400. As things stand, if he pays each moiety promptly he pays only £390—that is, 2.5 per cent. less on each of the moieties. If he pays the whole sum straight away, he will pay only £384. Even then, however, it is not the bargain that it seems because he has lost the use of £200 for the first half year, which is certainly worth at least the difference between the old reduction to £390 and the new reduction to £384. Thus, for the person who pays the demand in full at the outset, it is, to use the classic phrase, a mouldy turnip and there is no more inducement than there ever was.

Meanwhile, all those not in a position to pay the full amount in one go will be disadvantaged as compared with the present circumstances, so I do not think that the Minister or the assembly should claim too much for the exercise of the assembly's political clout in forcing or driving the Government to make the concession of raising the 3.5 per cent. to 4 per cent. For the ratepayer paying £400 in domestic rates, for what must be a rather large and nice house, the concession is worth just £2. I hope that that marginal ratepayer will appreciate the constitutional importance of the work of the assembly in securing that £2 for him.

There is no point in concealing the fact that the new system is a disadvantage for almost all ratepayers who will be affected by it. That might as well be put plainly on the record at this stage.

10.28 pm
Mr. William Ross (Londonderry)

The debate seems likely to be short, but I should like some clarification, for the benefit of myself and my constituents. It concerns the rates collected on behalf of the rating authority by the largest landlord in Northern Ireland—the Northern Ireland Housing Executive.

First, under the present system there seems to be no possibility of any Housing Executive tenant paying the entire rate bill in one fell swoop and thus receiving the rebate, if only because the rates are collected with the rent. Moreover, the person who pays week by week on that basis may not know how much is rent and how much is rates. Can something be done to bring the facts to the notice of those concerned?

Secondly, how often does the Housing Executive actually pay the rates that it has collected to the rating authority? Do they send cheques 10 times a year, biannually or annually? What is the procedure? If it pays them only once a year, is it expected to pay them all within the first month or does it pay them at the end of March? If the latter is the case, the private individual would be at a great disadvantage compared with the public body.

10.30 pm
Mr. David Mitchell

We have had a short but interesting debate on the order, which is one that affects everybody in the Province. The hon. Member for Hammersmith, North (Mr. Soley) attacked the general concept of the Government approaching efficiency as an object in itself without concern for the consequences. There are two points to be made on that. First, as to the job losses resulting from the closure of some of the rating offices through computerisation of the system, we do not expect that there will be any redundancies. We expect to be able to redeploy virtually all the people concerned.

Secondly, the hon. Member referred to the undesirability of efficiency as an objective in itself. If we achieve the saving of £1 million here, that is £1 million that we can use to a better purpose—to the benefit of the people of Northern Ireland—than having an inefficient system of rate collection, which does not do anything to benefit anyone in the Province. With another £1 million I can build more houses, which is a rather more valuable way to use the money, so I hope that the hon. Gentleman will not object to efficiency for efficiency's sake, because it is doing something helpful.

The hon. Member asked why I did not have the discount in two halves. The big economy comes in sending the rate demand out only once, and thus the stamps, the envelopes and the contents. There is a big saving in that. One can only provide for a discount against the bill that one has sent out. Therefore, it is not practical to do this in another way.

The hon. Member also asked where the computer is coming from. It is an IBM computer, part of which is made in the United Kingdom.

The right hon. Member for Down, South (Mr. Powell) raised the problem of the separation of rate rebates, particularly where there is not a rent rebate, and the fact that there may be a failure to be aware of the availability of the rate rebate. He went on to ask that information be made available to ratepayers on the rate demand as to the alternative ways of paying, and about the discount. I shall be pleased to leave one of the forms with him as a specimen. I am not sure whether a rate demand is something that is likely to send the right hon. Gentleman's blood pressure up, but he will find that it provides full details of how to pay, whether one can pay annually, in two parts or 10 parts, where one can pay, help with rebates, the arrangement over the discount, and such information. I hope that he will find that most of the points that he was raising in that part of his speech have been met. I take the right hon. Member's point that this information is not only for this year, and it would be my intention to proceed in that way. There will be a good deal of publicity this year about the introduction of the new methods.

The right hon. Member then suggested that there was some significant disadvantage to people who pay with the 4 per cent. discount rather than the existing 2.5 per cent. discount. He took as an example a house, obviously a rather large house, with a £400 rate bill. The difference between the old and the new system in terms of benefit to the occupier is not as great as he suggests. I take the average payment on a £200 house. Under the old system, the ratepayer would have paid £100 on his first half year for which he would have collected £2.50 in discount. He would then have deposited his money, presumably to earn its best return, the second £100, for six months, at 6½ per cent. interest. He would have got in just over £3. He would then have paid the second amount of £100 and collected his second £2.50 discount. His cash position under the old system would have been £8 benefit, £5 in discount and £3 from investment. Under the new system he pays £200 in the first month. He gets 4 per cent. discount, which is £8. He is therefore pari passu with where he would have been under the previous system.

Mr. J. Enoch Powell

There are many ways of looking at this matter. It is a curious way of looking at it to treat the interest that is earned upon money with which the ratepayer has not yet parted and that has not yet been demanded from him as part of his rebate.

Mr. Mitchell

I am simply comparing like with like. In the one case, the ratepayer hands over £200 in the first month and gets his 4 per cent. discount, which is £8. If he takes the same amount of money in relation to the previous system, he would actually have collected two lots of £2½50 and had £100 in hand for six months. If one is comparing like with like, it is arriving at the same sum. It cannot be said that people have been disadvantaged by the introduction of the new system.

Mr. Powell

I stated that it balanced roughly for the person who was in a position to pay the whole of his rate account at once. For everyone else, it is disadvantageous.

Mr. Mitchell

I accept that for people who cannot afford to pay the full amount at the beginning, there will be a disadvantage, but the practice will, I think, show that most of the people who could afford to take advantage of putting the £100 down twice a year instead of the 10 instalments system will be those who can afford to take advantage of the discount we are now offering. In the genuine area where people would have found it difficult to lay their hands on half a year's rates in one lump, they will be the ones who have made use of the 10 instalment system and will not use the present system either.

Mr. William Ross

It is all very well to talk about the fellow with £200, £300 or £400. What about the business man with £10,000, £15,000 or £20,000 who probably has to delve into his bank overdraft and pay interest?

Mr. Mitchell

He will have the option of doing whichever he wishes to do. I have tried to show that some of the assumptions that it was a major disadvantage are perhaps slightly exaggerated and that there is not the great difference that might be thought to exist. I commend the order to the House.

Question put and agreed to.

Resolved, That the draft Rates (Amendment) (Northern Ireland) Order 1983, which was laid before this House on 22nd February, be approved.