Stormont revenue raising plan remains elusive

Stormont revenue raising plan remains elusive

At Stormont this week there was a rare, full-throated call for revenue raising.

Gerry Carroll, the People Before Profit MLA, told the assembly he had heard no good argument against devolving corporation tax to raise it and “make the rich pay their way to fund public services”.

His intervention came during a debate in which MLAs were keen to shut down the possibility of raising revenue through household water charges.

The debate was intended to examine the structure of NI Water and the potential of converting it from a government-owned company to one owned by its customers, a process known as mutualisation.

This is seen as a way to free NI Water to borrow money for investment, without households necessarily having to pay much more than they currently do through property rates.

But the Infrastructure Minister John O’Dowd was having none of it.

“Mutualisation leads directly to domestic water charges – there’s no other way around it,” he said.

“If you want to go down the mutualisation route you end up charging hard-pressed workers and families directly for water.”

Consultations

During the period when Stormont was without ministers the Northern Ireland secretary ordered a series of consultations on revenue raising, including one on water charging.

Some of these never got started, notably on prescription charges and student fees.

Others were effectively binned by the new local ministers and some are still being considered. But most are unlikely to lead to significant change.

Water charging was one of the consultations which did happen.

The Department for Infrastructure (DfI) suggested five options, including a flat rate charge for all households, a charge related to the value of houses and the introduction of water meters.

Any sort of charging was quickly ruled out by the first minister, Michelle O’Neill, after she took up her post.

Thousands of responses were made to the consultation on free bus passes

Remaining on Mr O’Dowd’s desk is the consultation on free public transport for the over 60s.

This one was not directed by the Northern Ireland secretary but is rather a reflection of the financial pressures facing the public transport company Translink.

It drew a huge, organised public reaction: more than 20,000 responses.

A spokesperson from DfI said the minister is continuing to consider those responses and a decision will be made “in due course”.

Other consultations which are awaiting substantive ministerial responses are a proposal to cut the compensation rates for farmers with TB infected cattle and a review of a wide range of exemptions for household and business rates.

It is rates which seems the area which is most likely to see reform.

The Finance Minister, Caoimhe Archibald, has not ruled out changes but instead said she is “keen to understand what those who responded to the consultation had to say about the rates system”.

Asked about the issue again this week, she said: “We do not want to be in a situation in which we put more regressive charges on the backs of workers and families.”

Caoimhe Archibald is Northern Ireland’s finance minister

That would appear to leave the door open to changes which could be framed as progressive, such as higher rates bills for the 8,000 most valuable homes.

Those properties currently have their rateable value capped at £400,000.

This may also be the minimum required to satisfy the UK government’s insistence that revenue raising is part of the financial deal which accompanied Stormont’s restoration.

That was reiterated by this week by a statement from the Northern Ireland Office which tied revenue raising into the continuing discussions about improving Stormont’s overall “fiscal framework”.

A spokesperson said: “The secretary of state is clear that action is needed and that some difficult decisions are required to tackle the complex challenges facing public services in Northern Ireland such as in hospitals, schools and roads.

“Alongside the £3.3bn made available by the UK government, revenue raising will be a vital part of transforming public services and delivering more sustainable finances in Northern Ireland.

“We hope that ministers in the executive will move quickly to deliver on their commitments to produce plans and a new public service transformation board that will help deliver better outcomes for everyone.”

Stormont’s Department of Finance acknowledges that it needs to raise £113m in additional revenue over the next two years but its emphasis differs from the Northern Ireland Office.

“The challenges of delivering a balanced budget for 2024/25 should not be underestimated because the financial pressures facing our public services far outweigh the additional funding provided by the financial package,” a spokesperson said.

“The need for fiscal sustainability is widely recognised; however, this must be underpinned by a commitment from the British government to ensure funding to need.

“As part of a new fiscal framework, we will want to look at all options to deliver efficiencies, generate revenue, enhance borrowing powers and examine fiscal devolution.”