Agenda item

            The Committee considered the undernoted report:

“Relevant Background Information

      Members will recall that the Strategic Policy and Resources Committee met on 17 October 2008 to discuss a number of rates issues. The purpose of this report is to update Members on a number of developments which have occurred since the October meeting.

Key Issues

      The Comptroller and Auditor General (C&AG) for Northern Ireland has issued his audit report on the Statement of Rate Levy and Collection 2006/07. This covers all rate assessments billed and cash collections from ratepayers. In his report the C&AG stated that he could not give any assurance to the Assembly on the assessment and collection of rates for 2006/07 due to significant system control problems which arose following the introduction of a new IT system. His report highlighted numerous problems in relation to checking the accuracy of the figures in the accounts and control failures that impacted on LPS’s performance in administering and collecting rates.

      Following the issue of the C&AG report, the Assembly’s Public Accounts Committee has released its response to the report. The report, ‘examines the reasons for the financial and operational difficulties that have overwhelmed Land and Property Services in its assessment, administration and collection of rates.’[1]

      Members should note in particular that the Public Accounts Committee has made recommendations in relation to vacant properties, the accuracy of penny product information and the collection of arrears. These are the same issues which were brought to Members attention at the Strategic Policy and Resources Committee in October. The key recommendation made by the PAC is ‘The Committee recommends that revenue forgone and additional costs of collection as a result of the problems with the new system will not be passed on to Councils. The Committee would like an assurance of this from DFP.’

      In relation to this recommendation, the council has been informed that LPS intend to write-off £10m of debt in 2009/10. This is likely to result in losses for Belfast in the region of £2.5m in 2009/10. Also, indications are that increases in the cost of collection for 2009/10 will be more than 20%. It is recommended that the council write to the Minister to seek assurances that the increase in cost of collection and debt write-offs are not being passed on to the council in the context of the PAC recommendation.

      Members should also be aware that NILGA has issued a press release in relation to rates issues. The President of NILGA has written to the Minister calling on him to implement the recommendation of PAC that ‘revenue forgone and additional costs of collection as a result of problems with new systems will not be passed on to Councils’. It is recommended that the Council supports NILGA on this issue.

      A worrying development for the Council is that a number of high value non-domestic properties are being re-valued. This may lead to a further reduction in rates income which could be backdated for a number of years. If these reductions are claimed from the Council in one year then they will have to be financed from cuts in expenditure. NILGA has called for the extension of transitional relief arrangements to cover the impact of re-valuations on Councils. It is recommended that the Committee write to the Minister in support of the NILGA position.

      Given the seriousness of these issues and their potential negative impact on the EPP 2009/10, Members may also wish to consider whether a request should be made for Council representatives to meet with the Minister to discuss these issues in more detail prior to the setting of the rate for 2009/10.

Recommendations

      The Committee is requested to agree:

1.   to write to the Minister to seek assurances that the likely increase in cost of collection and debt write-offs are not being passed on to the Council in the context of the recommendation 23 of the PAC Report on Statement of Rate Levy and Collection 2006-07.

2.   support NILGA’s position on transitional relief to cover the impact of backdated re-valuations and calling on the Minister to implement recommendation 23 of the PAC Report on Statement of Rate Levy and Collection 2006?07.”

            Following discussion, the Committee adopted the recommendations contained in the report and instructed the Council’s Head of Corporate Communications to prepare for its consideration a report on a communications plan for the 2009/10 rate?setting process which would help the public to understand that increases in the rate which may become necessary as a result of failures of the Land and Property Services Agency were not being imposed as a result of increased spending on the part of the Council.