Report on the Proposed Large Retail Levy and the Expansion of the Small Business Rate Relief Scheme

report-on-the-proposed-large-retail-levy-and-the-expansion-of-the-small-business-rate-relief-scheme.pdf (28.24 mb)

Together with the Minutes of Proceedings of the Committee
relating to the Report, Minutes of Evidence, Written Submissions and Memoranda

Powers

The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Assembly Standing Order 48. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and Personnel and has a role in the initiation of legislation.

The Committee has the power to:

• consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation;
• approve relevant secondary legislation and take the Committee Stage of primary legislation;
• call for persons and papers;
• initiate inquiries and make reports; and
• consider and advise on matters brought to the Committee by the Minister of Finance and Personnel.

Executive Summary

In his statement to the Assembly on the Budget 2011-15 on 4 March 2011, during the previous Assembly mandate, the Minister of Finance and Personnel announced his intention to rebalance the non-domestic rating system. This would be done by way of a levy on larger retailers, which would be used to fund an expansion of the small business rate relief scheme. In explaining that his Department would consult publicly on the proposals, the Minister indicated that he hoped the subsequent legislation would be passed by the new Assembly to enable any changes to take effect from April 2012. For this to happen, it would be necessary for the legislation to pass by the accelerated passage procedure which, if approved by the Assembly, would remove the opportunity for the normal Committee Stage scrutiny of the Bill. Given the level of public interest in this matter, the Committee for Finance and Personnel considered that it was particularly important to undertake thorough scrutiny of the policy proposals prior to the final decisions being made by the Executive, and in advance of the introduction of the Bill.

The Committee sought to establish a sound evidence base for its scrutiny by taking the views of a representative group of stakeholders within the short timeframe available to it. Department of Finance and Personnel officials also provided additional information required by the Committee, again often within extremely short timescales. The Committee is grateful for the input from both stakeholders and Departmental officials, which has helped to inform this Report. A number of key conclusions and recomme ndations have been identified for consideration by the Minister of Finance and Personnel and the wider Executive.

Given the current economic climate, the Committee is, in principle, supportive of the proposals to expand the small business rate relief scheme. However, concerns remain that the scheme is a "blunt instrument" as it will apply to all small properties with a net annual valuation of £5,001 to £10,000, regardless of sector or need. While the consideration now being given to excluding large businesses with multiple small premises from the scheme is to be welcomed, the Committee would encourage the Department to consider further measures to refine the scheme so that it targets those businesses most in need.

The Committee sees merit in spreading the cost of funding the expansion of the small business rate relief scheme fairly across a number of large business sectors rather than it resting solely with large retailers. A range of viable options have therefore been identified to enable the scope of the levy to be extended to include, for example, banking and financial institutions, telecoms companies, wholesalers and large hotel groups in addition to large retailers. Finally, to ensure a fair and transparent means of distributing the rates burden in the longer term, the Committee considers it essential that the revaluation of non-domestic properties takes effect from April 2015, to coincide with the end of the small business rate relief scheme and the levy.

Download the full report here.