Minutes of Evidence - 23 September 2008
Members present for all or part of the proceedings:
Mr Peter Weir (Chairperson)
Mr Alban Maginness (Deputy Chairperson)
Dr Stephen Farry
Mr Danny Kennedy
Mr Alex Maskey
Mr Raymond McCartney
Mr David McNarry
Mr John O’Dowd
Mr Declan O’Loan
Mr Ian Paisley Jnr
Mr David Simpson
Mr Jimmy Spratt
Witnesses:
Mr Brian Grzymek, )
Mr David Hamill ) Criminal Justice Services, Northern Ireland Office
Mr David Kyle )
Mr Ray Jones ) The Compensation Agency
Mr Henry Spence ) Land and Property Services
Mr James McKay ) Legal Advisers Branch, Northern Ireland Office
The Chairperson (Mr Weir):
We proceed to the evidence session, and I invite Mr Grzymek to make his presentation to the Committee.
Mr Brian Grzymek (Northern Ireland Office):
I have brought a few people to cover the range of questions that might arise in the meeting. James McKay is one of the Northern Ireland Office’s (NIO) legal advisers, and he has been involved in drafting the legislation; David Hamill is one of my staff; David Kyle is one of my deputies in the NIO; Ray Jones is attending on behalf of the chief executive of The Compensation Agency; and Henry Spence is from the Department of Finance and Personnel (DFP), and he can provide helpful advice on the rating aspects of the proposal.
I will give a 10-minute overview of the background of the proposal and the areas to which it relates. We are here to clarify the background and circumstances of this proposal and to listen to the Committee. This afternoon’s meeting is part of a consultation process. Yesterday, I spoke to the Minister about today’s meeting, and he asked me to convey his apologies for his non-attendance; he has party business to attend to. However, he stressed that he wants to develop the proposed process, and he is happy to listen to the thoughts and considered views of members of the Committee.
The draft Criminal Damage (Compensation) (Amendment) Order (Northern Ireland) 2008 is part of a wider consultation that the Government are developing. We are seeking the views of the Assembly, and others, on the proposal to introduce additional criteria to the Criminal Damage (Compensation) (Northern Ireland) Order 1977. The criteria relate, specifically, to community halls, and I will explain how they are defined in the proposal. The consultation was initiated in June, when the NIO issued a consultation document that was laid before Parliament. It was sent to the Assembly, and all Members have received a copy. It was also distributed more widely within the community, and we have received a number of responses already.
The aim of our proposal and the new criteria is to provide additional access to statutory compensation for designated community halls, which are at risk of being subject to criminal damage. The damage caused by attacks, the loss of the facility and the repair costs, for instance, for the community halls can have a serious detrimental impact on the local communities in Northern Ireland, which rely on those facilities for many purposes.
Community halls play a vital role in maintaining social infrastructure in the areas that they serve. Therefore, the Government believe that it is right that steps are taken to support the local facilities through amending the Criminal Damage (Compensation) (Northern Ireland) Order 1977 in relation to statutory criminal damage compensation.
I am sure that members are aware that the general trend towards criminal damage in Northern Ireland has been in decline in recent years, and that is reflected in the activity of The Compensation Agency. The Government see that as part of their normalisation strategy in Northern Ireland. In the past number of years, the Government took the view that criminal damage in such buildings as community halls was a matter for the commercial insurance industry rather than the statutory system. The current limited statutory criminal damage scheme was seen as being sufficient. Members might recall that it focuses on damage that is caused by three or more persons or by an organisation, and which, subsequently, results in a Chief Constable’s certificate.
That being said, in 2006 and 2007, in particular, there was an unexpectedly sharp increase in the number of attacks on isolated and vulnerable community halls in many parts of the Province. Linked to that, perhaps, in May 2006, the DUP proposed an amendment in Parliament that sought to include some additional buildings under subsection 4 of the Criminal Damage (Compensation) (Northern Ireland) Order 1977. In effect, that would have included buildings that are exempt from rates because of their usage and their belonging to one of eight specified organisations — that relates to some earlier rating legislation. Had the amendment been successful, those buildings would have been treated as if they were agricultural buildings for the purpose of criminal damage legislation. They, therefore, would have been included, almost automatically, under the terms of the legislation if they were subject to significant criminal damage.
That amendment was supported by virtually all the local parties in Northern Ireland, along with the Conservatives and Liberal Democrats. However, it was defeated in the parliamentary vote. The Government recognised that widespread cross-party support for the amendment, including the support of all the Northern Ireland MPs who were present in the House at the time. After that amendment was defeated, they decided to give further thought to the issue, which was clearly one of concern across political parties in Northern Ireland.
The damage caused by attacks on community halls, the loss of the facility and the repair costs can have a significant impact on the local communities that use the halls. Typically the halls that are subject to damage are isolated, and they often do not have large memberships or commercially related links, such as bars, that can provide them with a source of income. They are, therefore, quite vulnerable. Those halls are often isolated, and they clearly cannot access the existing criteria under the current statutory compensation arrangements. Even if they could, it is often the case that there is no evidence to support their claim. It may well be that three people had attacked the hall, but if it happens in the middle of the night, no one may have seen the attack taking place. Thus, in exercising its responsibilities, The Compensation Agency may not be in a position to conclude that compensation is appropriate.
There are particular problems for those types of halls, particularly in rural and isolated areas. Essentially, it comes down to the difficulty in obtaining evidence to prove that the damage was caused by three or more people. The police clearly do all that they can to ensure that those halls are protected, but they cannot sit outside every rural community hall 24 hours a day. If they are not there, they may have difficult in obtaining evidence or may be unable to certify that the damage was the result of terrorist or paramilitary activity.
The increase in attacks on those halls caused further problems for the people who owned or managed them because they had a detrimental effect on their insurance premiums. We received reports that some facilities were finding it increasingly difficult to sustain normal insurance arrangements. In other words, they became even more vulnerable because they were not insured and they did not have access to statutory compensation. Thus, for such organisations or facilities, an attack could be terminal.
Ministers and officials met the insurance representatives, essentially with the aim of looking for a commercial insurance solution to the problem. Unfortunately, those meetings were inconclusive, and with the number of attacks increasing in 2007, Ministers felt that, as an alternative, consideration should be given to amending the current criminal damage provisions. The outcome was that the Government decided that the best way forward was to add a further criterion to the current Order to give all eligible community halls easier access to compensation for criminal damage. The big problem was defining what we meant by community halls. There is another side to the coin; although we wanted to protect those isolated and vulnerable halls, at the same time, most facilities in Northern Ireland are covered by insurance — and rightly so. The Government did not want to distort the insurance market by giving wide-scale access to statutory compensation where it was not necessary.
That would have had an immediate impact on the Exchequer, and downstream, if passed on to a devolved Administration, might well have carried with it a significant cost — a cost that should, perhaps, be borne by the insurance industry but that, instead, could have fallen to Government.
Our main concern, therefore, was to see how best to focus the legislation so that it addressed the problem about isolated community facilities, yet at the same time was not so wide-reaching that it resulted in a distortion of the insurance market or, indeed, a change in its behaviour.
The Government looked at how those eligible community halls that they wanted to target could be distinguished from other halls. In discussions with Department of Finance and Personnel colleagues and others, it was concluded that the new criteria for the Order should be targeted at, and specific to, community halls in the same way as for rates exemption. There has already been a great deal of work on the rating side in order to identify community halls that receive exemption from rates under the Rates (Northern Ireland) Order 1977.
The Government, in looking at how to identify the range of community halls that they were seeking to target, was drawn to two elements of the Rates (Northern Ireland) Order 1977; first, article 41(2)(e), which relates to halls or facilities that are deemed as being used for charitable purposes under the Recreational Charities Act (Northern Ireland) 1958; and, secondly, article 41A, a more recent addition to the Rates (Northern Ireland) Order 1977, which, in effect, extended it to cover a small number of named organisations.
Those two sections together refer exclusively to buildings that are used wholly or mainly for the purposes that are declared to be charitable under the Recreational Charities Act (Northern Ireland) 1958, or, in the case of those covered by article 41A, are used or are available for such use.
Taking that approach, the Government have gone further than the 2006 amendment. Rather than limiting the proposal to the eight bodies listed in article 41A of the Rates (Northern Ireland) Order 1977, the Government have expanded the provision to include other community halls that are exempt from rates under article 41(2)(e) of the Rates (Northern Ireland) Order 1977. That, in essence, broadens the coverage to quite a wide range of halls, which serve their local communities across Northern Ireland.
The Government’s concerns were initially raised by attacks on Orange Halls, of which there was a spate, particularly in 2007. Having said that, other halls are vulnerable, too, and the Government, in looking at this area, thought that important and focused on community halls that are used for charitable purposes. It is, therefore, much broader than looking at just the eight organisations, including the Ancient Order of Hibernians and the Order of the Knights of St Columbanus. The aim was to broaden that list in order to cover more at-risk halls while, at the same time, not creating such a large spread of coverage as to distort the insurance industry or other practices.
Eligibility for compensation will be dependent on the individual property meeting the already established criteria under the relevant parts of the rates legislation. That makes it relatively straightforward to identify halls that are covered, and will give some certainty with regard to coverage. That was considered to be the fairest and simplest way of focusing the legislation on community halls that are being used, or able to be used, for community welfare purposes.
The amendment simply creates an additional route to statutory compensation for those community halls that are exempt from rates under the relevant DFP legislation. The majority of facilities would already be eligible under existing statutory criteria — up to two thirds or more of facilities suffering criminal damage would normally be covered in any event under the three or more persons involved in the attack, or Chief Constable’s certificate, criteria.
However, that clearly left a gap. The aim of this addition to the legislation is to help to close that gap. Therefore, properties that may suffer criminal damage are still eligible to apply for compensation under the current provisions of the Criminal Damage (Compensation) (Northern Ireland) Order 1977. At the same time, this amendment broadens that coverage to areas that were identified as being in the gap.
The Government appreciate that the proposed provision is focused on community halls at a time when our society is moving forward and criminal damage is generally on the decline. Therefore, they have had to weigh up the need for the legislation — for what is, considered a specific, short-term problem — against their commitment to promoting normalisation of arrangements in a post-conflict society. They appreciate that an open-ended commitment to extending statutory compensation could distort the commercial insurance market and involve a commitment of further public expenditure that would stretch beyond the life of the current Administration and into that of a future devolved Department.
The amendment provides a simpler route to applying for compensation for community halls that are exempt from breaks under articles 41(2)(e) or 41A. The Government consider that to be an exceptional arrangement, and one that they would see terminating as normal society gains strength in Northern Ireland. For that reason, they propose the additional criterion that the legislation will have a sunset clause, so that it is time limited to a period of three years. This is in recognition of the fact that the recent increase in the level of attacks on community halls runs against the prevailing trend and, even since last year, there has been a downward trend in the number of attacks on such halls.
The Government see a current need for the legislation but their hope and expectation is that the need will disappear over the life of the legislation, hence the legislation can be allowed to lapse. That is why the Government have included the sunset clause of three years, after which the legislation would lapse unless the Minister at the time assessed what had happened during that time and decided that the legislation was still required — in that instance, the Assembly would have the power to extend the legislation for a further period.
Finally, the Minister acknowledges that the proposed legislation does not and should not cover all facilities in the community. Some people, I am sure, will argue that the legislation could go further. The Minister is concerned that the legislation must be carefully targeted to avoid an open-ended extension of statutory intervention in this area. The Government consider the proposal to be a workable and manageable way of dealing with the issue of increased attacks on community halls. The proposal focuses resources on supporting isolated, vulnerable, yet vital community facilities that have been at risk of increased criminal damage and that have not been effectively covered by the current criminal damage legislation.
That is a run-through of what has led to the legislation — I am conscious that the Committee will have several questions. My job and that of my colleagues is to give some clarity on the thinking behind the Minister’s proposals if we can and, otherwise, to listen carefully to members’ thoughts and relay them to the Minister.
The Chairperson:
Brian, you indicated that you have received some responses to your consultation already — will you give some more detail about that?
Mr Grzymek:
We have received telephone calls and some queries seeking clarification, but I do not know whether we have received any formal responses yet.
Mr David Kyle (Northern Ireland Office):
No, we have not.
The Chairperson:
I was going to say that if you have received any formal responses, it would be useful if you could share those with the Committee Clerk.
Mr Grzymek:
I am happy to do that. As good practice, we are publishing responses on our website as they are registered, so they will be available to anyone who wishes to see them.
The Chairperson:
Given that there are representatives from DFP and The Compensation Agency here, I wonder whether either of them would wish to add anything to what has been said.
Mr Ray Jones (The Compensation Agency):
I want clarify the understanding of what the legislation involves. If something happens to property, there are, in the real world, primarily two criteria by which a person is normally successful in making a claim. One criterion is that a proscribed organisation is responsible and the police will evidence that by issuing a Chief Constable’s certificate; the other is that there is some evidence that three or more people were involved. The real difficulty is that there are some damaged properties for which neither of those can evidently apply.
As the legislation stands, the other limited opportunity for making a successful claim relates to agricultural property, wherein neither of the other two criteria must apply. The claimant does not have to prove who did what, when or where, he or she needs only prove that the damage was not the result of an accident — for example, that there was some malicious intent behind what happened. The reason that I mention that is because that is how the legislation will work in the real world.
The legislation is so open that claimants only have to prove that it was not an accident; therefore, it must be evident to my staff how eligibility is defined and, to a certain extent, confined. It is important for the legislation to be clear. There is an identifiable group of folk who may claim eligibility for damage compensation in a very evident way. The legislation defines exactly how that entitlement is arrived at. I refer specifically to the eligibility for rate relief, which is clear; therefore, it will be simple for people to make a claim, and it will be easy to identify whether claimants are eligible and whether their claims can be met. From my perspective, that is fundamental to the legislation.
The Chairperson:
Do you wish to add anything to that?
Mr Henry Spence (Land and Property Services):
I have nothing to add. Everything has been covered.
The Chairperson:
Thank you for your presentation.
Mr Paisley Jnr:
Thank you for your presentation. I am generally supportive of the legislation. It is a good attempt to close a gap in the current criteria. With that in mind, I wish to turn to article 4A(5), which is the sunset clause. Why is it necessary to have a sunset clause? There is a gap that needs to be closed, but it will only be closed for a period of time and then reopened. It would be better to reverse the sunset clause, and if the Minister believes that it is necessary to remove it in the future, he can introduce a piece of legislation to remove the criterion. That is the only criterion that is subject to a sunset clause. I wonder whether there is any way in which that could be reversed.
Mr Grzymek:
Different approaches can be taken, and Shaun Woodward raised the issue with your colleagues in Hillsborough earlier this year. The sunset clause was recognition by the Government that, in essence, we are moving towards normalisation. Prior to 2007, there were relatively few attacks on community halls, and, since then, the number of attacks has decreased again.
The Government are concerned that anything that we do to extend the statutory compensation criteria ultimately influences and distorts the normal market for insurance, which covers the vast majority of premises in Northern Ireland. There was a serious increase in the number of attacks in 2007, which convinced the Minister that something had to be done. However, the perception was that, as we move towards normalisation and a post-conflict society, those sorts of attacks are on the decline. They were on the decline before 2007, and the expectation is that 2007 was a blip.
Ultimately it will take a year for the legislation to come into operation. Therefore, with three years running, that will be a total of four years of subsequent evidence after 2007. If there were a significant number of attacks during that period, the Government’s expectation is that the Minister will exercise his/her views on whether that would constitute a renewal of the legislation. The Government’s current assessment is that normalisation should remove the need for the legislation over the next few years. Therefore, on that basis, Ministers decided to include the sunset clause.
Mr Paisley Jnr:
I agree that we should all live in hope, but the unfortunate thing is that when the sunset clause kicks in — when the legislation expires at the end of 2012 or in the spring of 2013 — some poor community association or Orange Hall up the country will end up being attacked and will be exempt from benefiting under this piece of legislation. It would be better if the legislation continued to run until a Minister determines that the threat has ended, rather than it ending at an arbitrary point that we set now when we cannot foresee the future. Perhaps you should take that point back and consider whether it is possible to make amendments to it.
My other question is about problems with interpretation of the meaning of the Order. Do you foresee any problems with interpretation? I am worried that the Order comprises a page and a half, but the explanatory document comprises 27 pages. The Recreational Charities Act (Northern Ireland) 1958 refers to properties of "social welfare". The draft Order refers to community halls and:
"buildings used or made available for use for charitable purposes".
You also spoke about rates-exempt buildings. Perhaps I am being pedantic, but do you foresee any problems with the interpretation of the Order? If so, is there a way of smoothing that out so that everyone knows exactly what the criterion means and to whom it applies?
Mr Grzymek:
The explanatory document was of the length that it was because the Order is simple. We are not trying to invent new definitions; we are trying to link new criteria to existing definitions, which are available and have been tested in rates legislation. All the best Orders are often simple and short. The explanation tries to give more of a rounded view, to indicate where the Order is coming from, and how it links into the definitions. The NIO’s view is clear cut: we are working on existing definitions. That is one of the strengths of the Order.
The draft Criminal Damage (Compensation) (Amendment) Order (Northern Ireland) 2008 includes a phrase that adds one additional criterion. Having consulted with colleagues who are responsible for rates legislation, we think that that is a workable and practical solution. Our legal advice is that that is not in any way ambiguous and that it should be straightforward and clear cut. My colleagues may want to speak on that from a legal or a rating perspective, but I do not perceive a problem with clarity of definitions.
Dr Farry:
I want to comment on the proposed sunset clause. Could a middle way be found, which would give the Assembly the ability to renew the legislation, perhaps through an affirmative resolution? As the draft Order stands, a future Minister could address the sunset clause, but the Assembly would be asked to pass similar legislation. Would a process by which the Assembly had the ability to renew the legislation for a period by affirmative resolution be simpler than going through the exercise of legislative process?
Mr Grzymek:
I will answer that, and my colleagues may wish to add to my comments. The Secretary of State is dealing with a problem that exists now. A year ago, Shaun Woodward may have hoped that a different sort of Administration would be in place, so that the legislation would have been the responsibility of the Assembly. As that point has not been reached, the Government have to exercise the role of good government. The legislation does not predict what the Assembly may decide to do in the future; it seeks to put a finite arrangement in place. In a future devolved Administration, the Assembly could use the legislation and the Minister responsible could decide to renew it.
Equally, the inclusion of the sunset clause means that the Government are not constraining or fettering the Assembly in the decisions that it may make in the future. The legislation deals with the current position; it does not lock the Assembly or the Executive into a future structure. It deals with an immediate problem, which the Minister thinks will have lapsed after three years. At that point, if the problem still exists, it would be for the Assembly to decide whether it wishes to renew the legislation. If a better solution is found, the Assembly could legislate for that. In the meantime, the Government have to deal with the issue. It has come before the Assembly Committee and Parliament to ensure that local views are considered.
Dr Farry:
My second question relates to the eligibility criteria, the qualification for which is rates exemption. Does that refer to a building that already receives a rates exemption, or does it refer to a building that is eligible for rates exemption?
There are particular problems with Land and Property Services (LPS) and the take-up of rates relief at the moment. One can envisage a situation where a building may be potentially liable or eligible for rates relief but has not applied for that relief for whatever reason.
Mr Grzymek:
I do not think that any Government can force people to avail themselves of rates exemptions or this type of legislation. Maybe my colleague from LPS could explain what steps the Department of Finance and Personnel has taken to try to increase uptake. We are quite clear that the proposed legislation relates to facilities that are exempt from paying rates. That means that they are contained within the listed bodies for the purposes of article 41A. Groups that are on the list know that they are listed. There are only a small number of bodies that are physically listed and, therefore, covered by the Rates Order 1977. Alternatively, some organisations have started the process of becoming listed, but that listing has not actually come into effect. If those bodies have applied to be listed prior to any damage caused, and become listed after the damage occurs, they would still be covered.
From the point of view of community halls that may be affected, this Government have provided them with an opportunity to be exempt from rate payments, and we are now giving them an additional route to access criminal damage compensation. It is clearly in their interests as individual organisations to avail themselves of this, but, at the same time, we cannot force individuals to do so. On the rate side —
Mr Spence:
Following the amendment in 2006, we wrote to all halls that we thought would be eligible under the new legislation to explain it, and the basis for qualification for exemption. We had a large uptake of applications. We feel that most of the halls that are eligible would already be listed, but, again, they are still open to apply.
Dr Farry:
My third question then: has the legislation been proposed to address a gap or failure in the insurance market, wherein particular halls either cannot get insurance or are subjected to premiums that are too high because of the threat of future damage or past incidents that have occurred? Presumably, in two respects, there is a deadweight attached to this intervention in that it will cover halls that are able to avail themselves of insurance at a reasonable rate. At the other end of the spectrum, is there potentially a danger of an insurance gap emerging, where there may be halls that are not eligible or will find it difficult to achieve reasonable premiums? This scheme would only protect them in relation to overt criminal damage, but could you envisage a situation whereby a hall is subject to an accidental fire, and there would not be anything in place to protect it because such halls cannot avail themselves of a more general insurance policy?
Mr Grzymek:
I think that it is important that Ministers do not see this legislation as being totally focused on the insurance industry. We are focusing on valuable community halls, which — because there has been an increase in attacks on such facilities — are at risk.
It is true that, because there have been more attacks, it may be that they are finding insurance premiums increasing in cost. I am equally sure that when this legislation is passed —assuming that it is passed — that this will be factored into insurers’ future risk assessments. In some ways, this is about risk, and we have to recognise that in the vast majority of facilities in the community, which suffer criminal damage or significant criminal damage, those buildings are already covered by statutory compensation for criminal damage.
We recognise that there has been an increasing number of attacks. There are halls that are vulnerable — quite often those halls will be isolated, with a small number of members, or will support a very small local community, which is not terribly well-off. We are not talking about facilities that have their own bars or commercial outlets with the capacity to support themselves through insurance and deal with many of the consequences of damage. We are talking about very small facilities, which do not serve big communities and are not very resilient. I think that that has been the Government’s focus, but the aim has not been to indemnify the insurance industry from risk. In essence, the Government’s view is reflected in the sunset clause. The aim is that as things progress and the risks become clearer and more easily insurable, and as this legislation lapses, insurers would have a time stream of evidence of low levels of attack and that would factor into insurance premiums. I understand that you will be talking with the insurance industry separately.
Mr Kennedy:
One of the ironies of the situation is that, particularly in the case of Orange Halls, the majority of them have been attacked only since we, allegedly, have had peace, and that is the difficulty that we have with the sunset clause. Many of those halls are in rural, isolated areas, and they are fairly easy prey for low-level sectarian attack. Nevertheless, serious damage has been inflicted on those Orange Halls, community halls and other premises. If the sunset clause were rewritten or readdressed, the Assembly — or whatever body was responsible — could ensure that it was subject to ongoing review by the appropriate Minister, either locally or from Westminster.
My other concern is that the parliamentary journey that is envisaged will mean that the commencement date is likely to be at least a year away?
Mr Grzymek:
No. Without prejudice, I am conscious that the issue is going through a consultation process and, depending on the outcome, we will produce the final legislation that will then go through a legislative process. On a good day, with the wind behind us, we would expect to get the draft Order to Westminster before the end of the calendar year. If it were to go through Westminster in late November or early December, we would hope to have it in legislation by January or February, with the expectation of a start date — again, without prejudice — of April or May. The Secretary of State has made it clear that he wants the matter to move quickly. The need has already been recognised, and, therefore, it would not be helpful to have the legislation introduced a year or two later. We are pulling out all the stops to try to make it move quickly, but it will probably be next Easter before it is introduced.
Mr Kennedy:
Is it possible to subject the legislation to accelerated passage?
Mr Grzymek:
In essence, the Government have looked at that suggestion and, it is fair to say, they are giving the matter a fair wind to move it as fast as possible. At the same time, I do not think that the extent and severity of the problem is such that Ministers have felt that they could persuade their colleagues in Government that the matter should follow a more accelerated route. The legislation is being taken forward very quickly.
Mr Kennedy:
For the period in which the legislation will apply, what process do the trustees or owners need to undertake when damage has been done to a hall that is exempt from rates and, therefore, qualifies technically? Do they still require a Chief Constable’s certificate or —
Mr Grzymek:
No.
Mr Jones:
As I said earlier, there are two criteria, the Chief Constable’s certificate and the three or more people. Those are not mutually exclusive but, in this instance, one could ignore those two criteria if needs be, provided that the premises are shown on the list — if you like, keeping it quite simple. That, in itself, will establish eligibility and entitlement at a stroke.
The normal processing of claims requires issues such as exploration of legal title and assessment of the actual quantum of cost for putting right the damage, etc. Those processes take their own due time. However, as regards eligibility, if one can demonstrate that the premises are on the list, that part of the detail is already taken care of. It will then go through the administrative process where the details of quantum will be sorted out.
Mr O’Loan:
I would like more clarity on which buildings the draft Order will cover. I am particularly concerned about churches, church halls, buildings associated with, or built on, sports grounds — changing facilities or social buildings — and council-owned buildings.
Mr Grzymek:
We have focused on isolated community facilities that provide social-welfare-type support. Those are covered by articles 41(2)(e) or 41(A). On the face of it, the facilities that you listed would not be covered. The Government’s aim is to address the problems faced by those who use a number of halls that have come under increasing attack. My colleagues in The Compensation Agency and I considered the evidence of attacks across the range of halls in recent times, and the number of claims received by The Compensation Agency from those groups has not been significant.
That does not mean that there are no council or sporting facilities that have not been vandalised or damaged from time to time. Rather, in fact, there has been a fairly uniform rate of attack, as far as we can tell. There has been a significant increase in wanton attacks on some community halls, in many cases resulting in serious damage. The Government are saying that the users of those other facilities, in circumstances in which the attack was carried out by three or more people, or by a paramilitary organisation, may apply for a Chief Constable’s certificate. Those bodies, in the main, will have their own insurance, and if they have not been subjected to a campaign of attacks, their premiums are more modest. The Government have been trying to focus the legislation on what they consider to have been the recent problem, rather than to cover more general societal concerns about criminal damage, which are, to a reasonable degree, covered by the existing legislation.
Mr O’Loan:
I want to be clearer about that. I understand that the motivation for the legislation was to cover isolated and vulnerable rural buildings. What precisely in the wording of the Order restricts the applicability of the legislation to that type of building? What rules out the buildings on the list that I offered?
Mr Grzymek:
In essence, all the buildings that you mentioned are covered by various pieces of rating legislation. Sports halls are covered under article 31 of the Recreational Charities Act (Northern Ireland) 1958, and church facilities and council facilities are covered under different sections of article 41 of the Rates (Northern Ireland) Order 1977. We have taken some trouble to try to focus as closely as we can on organisations that provide social-welfare-type functions under the 1958 Act. Those are covered by article 41(2)(e) and 41A of the draft Order.
Mr Spence:
The church halls and sports halls and grounds all come under different parts of the legislation. Sports grounds get a sport and recreational rate relief of up to 80%, but they do not come under the two articles of the draft Order that were mentioned.
Mr O’Loan:
If a claim was to be made under the draft Order, is there an excess that must be paid by the claimant?
Mr Grzymek:
The Criminal Damage (Compensation) (Northern Ireland) Order 1977 sets a general excess amount of £200. That exemption amount has been in place since 1990. The Government reviewed that amount recently and decided to leave it at that level. It is a relatively modest amount.
The Chairperson:
Am I right in saying that the legislation excludes a number of premises that have been mentioned, such as halls or clubs with alcohol licences, and registered clubs?
Mr Grzymek:
Both types of premises are specifically referred to in article 41A.
Mr Spence:
Yes. Any property that has a licence is specifically excluded.
Mr A Maskey:
Mr Spence, you said that you had contacted a number of organisations that you felt might be eligible for a rates exemption. Which organisations would not be eligible?
Mr Spence:
We sent out information to every hall on the valuation list as we thought that they were all potentially eligible.
Mr A Maskey:
I am not sure whether Mr Spence can answer this, however, were there any organisations that came into that final category mentioned by the Chairman — halls that may have a social or club element — that are not eligible? Can Mr Spence give me any example of halls that are not eligible, which have been damaged in exactly the same way as those halls that are used for social-welfare purposes? Although he is saying that they may be covered under other legislation, could any of those other halls have been excluded from compensation?
Mr Spence:
I do not know; I was just dealing with the rates end of things.
Mr A Maskey:
The point that I am making is that those facilities were attacked for exactly the same reasons as the social-welfare halls that you are describing.
Mr Grzymek:
I think that I can answer that a little. The truth is that it is very hard to compare like with like. We were trying, as best we could, to focus on the more isolated community-type halls, and we were using the rates legislation to give us a practical working definition. Clearly, sporting and other facilities can, on occasions, be attacked; we looked at The Compensation Agency’s records over a number of years to see who had made claims. That is not always easy to work out; a claim could come in against an individual, trustee or committee, so it is sometimes hard to accurately interrogate the data. Certainly, the level of claims against some of the groups not eligible for an exemption was very low in contrast to the groups on which we are trying to focus. Those other organisations still have the capacity to get compensation under the other criteria in the legislation, so that was not seen as a high-level problem.
Indeed, for a number of recent years, it was suggested that there have been a lot more attacks on some types of hall. In 2007, there was a spate of serious attacks, but for two or three years prior to that, the number of attacks was down. The Government are not trying to extend statutory compensation to cover every potential eventuality; rather, the Order is trying to pick up on a particular area and focus sharply on that problem. The expectation is that this is a transient problem, which, all being well, will disappear after a period; we are trying to keep the provision to a limited duration.
Mr A Maskey:
What I am trying to work out in my mind is that if the Order is being devised to deal with a problem, which surely emanates from attacks on a number of vulnerable facilities that may not qualify for exemption for various reasons — because they cannot get a certificate; because they cannot prove that the property was attacked by three or more people — how will that gap be closed?
If the intention of the Order is to close the gap for people who otherwise may not be eligible under the existing narrow legislation, surely, that intention needs to be followed through. There may be organisations, which in some cases have, for example, a licence for alcohol, but only experience an extremely low level of usage. Some of those facilities have suffered severe damage and may have been closed as a result; however, under the definition of the new Order, they would still be excluded. The intention of the Order, in my view, falls short.
Mr Grzymek:
The Government have tried to focus this as best we can; by definition, there are always going to be problems on the margins. For example, there may well be some facilities that could be covered under the exemptions of 41(2)(e) because they are largely or substantially being used for social welfare, but have not applied for that exemption. People have to look at whether their halls or facilities might be exempt. The legislation is trying to pick up the vulnerable end of things. Facilities that have licences or other commercial activities are in a different position from those small vulnerable halls.
A decision always has to be made on where to draw the line. The Government are concerned that broadening the definition very slightly would make it difficult to prevent it from being broadened much more. That could have the serious and unintended consequence of distorting the insurance market. The Government were trying to target public money as best they could.
The Chairperson:
I appreciate the point that Mr Maskey made about the explanation. Article 41A(2)(b)(ii) states:
"on which a person may under a licence (other than an occasional licence) or a protection order sell intoxicating liquor by retail".
I do not think that a facility would be exempt if it used its licence only very rarely.
Mr McNarry:
I endorse the comments that have been made about the sunset clause. The sunset clause should be removed, and there is nothing else to be said on that matter.
You referred to interpretation in your answer to another question. It probably does not have anything to do with the draft Order, but my question concerns its application. Do you think that the implementation of the Order will result in more resources being made available to provide compensation for halls that need it?
You are going to add more vulnerable halls to the list. We all hope that there will not be more casualties but, as you have said, there have been casualties in the past year. Will a provision be made in the Order to ensure that resources are provided for a claim to be done and dusted quickly?
Mr Grzymek:
The short answer is yes. The legislation was drafted on the basis of estimates. We calculated the likely maximum and minimum requirements — based on our analysis of claims made over a number of years — and factored those into our spending for the 2007 comprehensive spending review period. Those estimates could be too high, which would be fine because there are plenty of other things that we could spend money on in the criminal justice system. If the estimates are too low, we would have to press the Government, and the Department would have to find a way to meet the need.
We have assessed the incidence of attacks and the associated costs. The majority of halls that are attacked are covered. About a quarter or a third of halls that make claims are not covered, and their cases are passed to insurance companies. We are not dealing with vast numbers but — based on estimates — the halls that are not covered are factored into our spending analysis.
The Chairperson:
Who from the insurance business should we invite to give evidence to the Committee?
Mr Grzymek:
My colleagues have directed the Clerk to the Committee on that matter. David Hanson — who was Minister of State at the Northern Ireland Office before Paul Goggins — met insurers early in the process. We have given the Committee Clerk the name of someone who can update the relevant contacts.
A significant proportion of insurance for these facilities has been provided by three main insurers — Zurich, Royal Sun Alliance and a third, the name of which I have forgotten. The Committee should contact one of those insurance groups. I think that the contact in Zurich Insurance had a link to the Association of British Insurers.
The Chairperson:
Before bringing in the two members who have indicated that they want to speak, is there anyone who has not spoken who wishes to do so?
Mr Paisley Jnr:
I have already spoken but I want to raise an issue that has not yet been covered.
The Chairperson:
If it is something on which you require clarification, I will bring you in at the end. Preference must be given to people who have not had an opportunity to speak yet.
Mr Simpson:
I was attending another meeting, so I apologise for being late. The point that I wish to raise may already have been covered, so I apologise for that as well.
First, I wish to echo what some of my colleagues said about the sunset clause, which must go.
If an isolated hall — irrespective of what sort — has a small membership, it may not qualify for rates relief, because it does not have a community organisation with which to vote, and, in a doomsday situation, the organisation may not be able to afford the hall’s insurance premium. Is such a scenario covered under any part of the legislation?
Mr Grzymek:
There will be small facilities. Article 41(2)(e) and article 41A of the Rates (Northern Ireland) Order 1977 provide two routes that such bodies might take. Article 41(2)(e) identifies a small number of organisations, which, if they are available for the stated purposes, will be covered. However, the reality is that if an organisation has a hall, it is eligible for rates. Although we cannot force people to seek rates relief, if a hall serves the local community for social-welfare purposes and it is rated, it would make good sense for the trustees to take steps to have the hall identified as eligible for rates relief. If a facility does not provide any social or community input, it is not the sort of body that the Government are aiming to support, and it must source its own insurance.
Mr A Maginness:
I agree with the draft Order’s general objectives. As a lawyer, I have encountered cases in which people have suffered great injustice, and people in situations not dissimilar to those already mentioned have been deprived compensation. For many ordinary people, such an outcome is heartbreaking.
Throughout, you have used the term "isolated community buildings or halls". I cannot see where "isolated" is defined in the legislation. You referred to articles 41(2)(a) and 41A; however, "isolated" does not appear to be expressed anywhere in the legislation. I am at a loss to know how you have managed to import the word isolated into the legislation.
Mr Grzymek:
I said that the Government’s focus has been on isolated halls, which is where the majority of the problems have been. In reality, the legislation does not single out isolated facilities. It will also cover community halls in town centres. Nevertheless, in practice, if a facility in the centre of Belfast is attacked by several people, the chances of that incident qualifying for statutory compensation for criminal damage by three or more people are fairly good. If a facility in Crumlin or Ballywalter — outside a town — is attacked in the middle of the night — even if 10 people are involved, the likelihood of obtaining sufficient evidence to determine, on the balance of probability, whether the incident would be covered by existing criteria would be more problematic.
Isolated properties had been the concern but we are, essentially, adding to existing criteria that cover agricultural properties, attacks by three or more people or attacks that warrant a Chief Constable’s certificate. We are adding to the portfolio of criteria, which will, probably, give disproportionate advantage to those isolated facilities. A facility could be attacked in a town during the night, and there could be no evidence. That would mean that the police cannot tell the agency that three or more people have committed the crime. Therefore, in that circumstance, it is acceptable that such facilities will benefit, too.
Mr A Maginness:
Is it the Government’s intention to remedy the difficulty where isolated community halls are attacked and people cannot receive compensation? That objective is not necessarily covered by the legislation.
Mr Grzymek:
The Government are keen to acknowledge attacks on community halls. It is reasonable that statutory criminal damage legislation should support those halls regardless of their location. Generally, it is probably easier for non-isolated halls to access criminal damage compensation.
However, the focus is specifically on community facilities covered by either article 41(2)(e) or article 41A. The Government are content that that legislation will protect community halls that provide important support in rural and urban areas. If such halls are attacked and seriously damaged, but three or more persons are not involved, they will still satisfy that criteria.
Mr A Maginness:
Do those halls have a social-welfare function? How is that social-welfare function defined?
Mr Grzymek:
We are, in essence, piggybacking on existing rates legislation. Henry can explain the link between the examples and the 1958 Act.
Mr Spence:
The hall must be used mainly for purposes — normally social-welfare purposes — considered charitable under the Recreational Charities Act (Northern Ireland) 1958. The people who use the hall must need such facilities because of their age, youth or infirmity, or they must be available to the public at large.
Mr A Maginness:
You said that sporting facilities are excluded because they are covered by a different section of the Rates (Northern Ireland) Order 1977. Does that mean that they do not have a social-welfare function?
Mr Spence:
A hall that is used for a youth club or sporting facilities could be considered under that legislation.
Mr A Maginness:
Could it be considered under this legislation?
Mr Spence:
Yes.
Mr Grzymek:
In essence, we did not intend to reinvent the wheel. Some community facilities are already covered by those exemptions. We want to use that definition to secure some degree of certainty, because organisations that are exempt know that they are exempt — they are published on a list, and, of course, they will have applied for that exemption. In the event of criminal damage, they are aware of the availability of that compensation route.
Mr A Maginness:
When did article 41A come into operation?
Mr Spence:
1 April 2006.
Mr A Maginness:
How many organisations took up the provisions of 41A?
Mr Spence:
As far as I am aware, all the organisations listed —
Mr A Maginness:
I mean, in terms of the properties that they own or manage.
The Chairperson:
It may be useful if you could provide a written response.
Mr A Maginness:
That would be helpful. An estimate of the number of community halls identified or estimated to have been affected would also be beneficial.
The Chairperson:
Perhaps the officials could get back to the Committee on that particular point?
Mr Grzymek:
I assume that Mr Spence could supply an estimated number of community halls that are listed as rates exempt under article 41(2)(e) of the Rates (Northern Ireland) Order 1977.
The Chairperson:
Finally then, there was just one point that Mr Paisley wanted to clarify.
Mr Paisley Jnr:
I would also appreciate a copy of the aforementioned list. I think that that would be very useful. You have said in the copy document that the proposed extension of the criminal damage compensation could cost — going from history — an additional £300,000 per annum. Obviously, it is difficult to estimate the full cost but —
Mr Grzymek:
That was the top end of our range.
Mr Paisley Jnr:
OK. Obviously, Ministers have committed to that amount. Can you give the Committee any indication as to where they are drawing those funds from?
Mr Grzymek:
As stated, that figure is at the top of the range. However, when the Minister decided to proceed, it was factored into the CSR 07 bid. Therefore, when it came to how the funds were divided across the sector, the Compensation Agency will have given estimates as to what it predicts its costs to be —
Mr Paisley Jnr:
However, there has also been an in-year bid for the CSR.
Mr Grzymek:
In essence, the CSR will have allocated funds on a three-year basis to The Compensation Agency. That has been factored in. In relation to its total budget, it is not a substantial sum. However, it is real enough and it means that other areas will be receive slightly less funds
The Chairperson:
I thank the officials for their evidence and the time that they have given the Committee today. The Committee will hear two further evidence sessions over the next two Tuesdays, each starting at 3·00 pm. Those sessions will be open to the public, and it would be helpful if the NIO had representatives present to provide clarity on any issues that may arise.
Again, thank you all for your attendance today and for answering all the questions that the Committee has put to you.
