Belfast Telegraph

Sue Gray: Rates review is about creating fair system which can respond to economic changes

Businesses and organisations across all sectors in Northern Ireland are concerned about our business rates system
Businesses and organisations across all sectors in Northern Ireland are concerned about our business rates system

By Sue Gray, Department of Finance

In May this year I announced a fundamental review of business rates in Northern Ireland.

Why? Because time and time again when I am out and about across Northern Ireland business rates is one issue that is regularly raised with me.

Businesses and organisations across all sectors have told me in their experience there is an unfairness about our business rating system.

The reality is the multiplier used to calculate our business rates is now higher than anywhere else in the UK.

I appreciate and accept rates are a major expense for businesses large and small. However, they are also an essential source of funding for public services.

Each year rates generate over £1.3bn which helps fund vital public services like health, education and infrastructure, as well providing on average 77% of district councils' income to provide many council services.

It is no secret our public services are under extreme financial pressure. We are operating in significantly financially challenging times.

Sign In

This review isn't necessarily about reducing the overall amount of revenue available, but instead it's about looking at how this money might be raised more fairly.

If we can find ways of reducing the demands on funding from rates we will absolutely do so.

I want a rates system which is pro-business. We must enable and encourage businesses to start up, grow and flourish across all sectors.

This review is about coming up with solutions which will help create a rating system which is fit for purpose.

The problems with our rating system are well documented. Now is the time for innovation, to generate ideas and solutions. It was within this context I announced a public consultation in September to get a wide range of views and perspectives of all those with an interest in business rates.

The department's Business Rates Review Team have been travelling the length and breadth of Northern Ireland meeting with councils, business ratepayers, business improvement districts, chambers of commerce, trade bodies, and a host of other organisations.

The level of engagement has been fantastic. I am extremely grateful for everyone who has got involved and shared their ideas.

It enables us to progress in an evidence-based way.

This consultation is about exploring how the tax base could be widened to facilitate lower business rates, looking at alternative taxation options and considering does the current system really recognise ability to pay.

Each year some £238m is awarded in business rate reliefs and exemptions for everything from sport clubs, residential homes, charities, industrial de-rating and relief for small businesses.

Nearly £42m is foregone in rates as vacant premises have relief applied at 50% - while other parts of the UK charge full rates.

Are all of these of these reliefs still relevant today?

Our rating system must be able to respond to economic changes now and in the future.

In considering ability to pay, for example, we could have two businesses who both receive the same level of relief, yet one could be struggling while the other may not need the same financial assistance.

But this consultation is about much more than reliefs and exemptions.

It's also about looking at the balance between the regional rate set by central government and the district rate set independently by each local council.

The consultation is also seeking to examine how business rates operate in relation to domestic rates.

In Northern Ireland there are some 800,000 domestic ratepayers whose average household rate bill in 2018/19 was £940, while in England and Wales the average Council Tax bill when water charges are added is over £1,600.

There are 75,000 business ratepayers in Northern Ireland, yet they generate nearly half the overall rate income.

I firmly believe this consultation provides a great opportunity to look at what's worked in other areas and take the very best of that and go even further.

I want to ensure businesses rates do not place an unacceptable burden on ratepayers.

Our rating system must be effective and fair, one which is capable of responding to wider economic changes, and generates the funding our public services need while enabling economic growth right across Northern Ireland.

Of course we will need ministers to implement proposals that come forward. But I want us to be ready with updated sound advice and realistic options for incoming ministers that take account of where we are today. Why? Because I believe that is the right thing to do.

There's now less than a week until the consultation closes on November 11. So please get involved and help us reshape our business rates system to ensure it delivers for all.

Further details on the consultation can be found at

Sue Gray is Permanent Secretary at the Department of Finance

Belfast Telegraph