According to Department of Finance officials, as of 1 December 2024, there was £119m of unpaid rates. This includes unpaid rates that have been carried forward for a number of financial years and have not yet been written off.

While a previous consultation looked at the total removal of the early payment discount for domestic ratepayers, the latest proposal is to reduce it from 4% down to 2%, rather than lose it altogether.

A consultation is due to be launched in January 2025 about the early payment discount reduction (which projections say would bring in an additional £4m of revenue, compared with the current £119m in unpaid rates).

On 7 January in a post on social media, DUP MLA Paul Frew made a comment about the total level of unpaid rates in Northern Ireland and how this contrasts with proposals to reduce the discount for early payment. The post included a video clip from the 11 December 2024 meeting of the Committee for Finance, showing an exchange between him and department officials, while the text accompanying the video claimed:

“People have the right to be angry, losing the ability to save money through discount no matter how small, whilst there is £119 Million worth of unpaid rates”

At a December 2024 evidence session of the Northern Ireland Assembly Finance Committee, department officials told MLAs that at the beginning of that month, the carried-forward figure of unpaid rates stood at £119 million.

This includes rates that have remained unpaid but are still being pursued from previous financial years. Mr Frew – a member of the Finance Committee – quotes this figure accurately.

Mr Frew’s social media post referred to “losing the ability to save money through discount”. The current proposals announced by the Minister and expected to go out for consultation in January 2025 are about reducing not removing the discount for early payment of rates – however, this would still amount to a loss of money (via a rise in bills) for those ratepayers who qualify for the discount.

Based on all this, the MLA’s claim that Northern Ireland currently has £119m in unpaid rates is supported by evidence while his contextual comparison about how people who settle their bill quickly could lose out financially under new policy proposals is also fairly made.

Please note that the exact wording of the consultation proposals have not yet been made public.

FactCheckNI contacted Mr Frew about this claim. He responded quickly, referring to evidence provided at a meeting of the Finance Committee on December 11.

Rates bills are issued to domestic and non-domestic properties by Land and Property Services (LPS), part of the Department of Finance (DoF).

The Department of Finance website explains that: 

“The money that you pay in rates contributes to the funding of public services including:

council amenities such as recreational facilities, bin collection and tourism

regional services such as roads, education and healthcare”

Some of the money collected goes towards services provided by NI Executive departments. The other portion is levelled at a ‘rate’ set by each local council in order to fund their services. The website says that “LPS rigorously pursues the recovery of rates and if you do not pay your rates we will take you to court”.

How much revenue should be raised by rate bills?

Just under £2 billion.

Giving evidence to the Finance Committee on 11 December 2024, the chief executive of Land and Property Services explained that “since 2014, the value of gross collectible rates that can be collected has increased by 32% from £1.49 billion to £1.97 billion in 2024.”

How much is not collected?

At the same Finance Committee evidence session, the LPS chief executive explained that “the departmental target on collection of gross collectible rates from 2024-25 is set at 93%, which translates to £1.8 billion by 31 March 2025”. 

If this collection target is met but not exceeded, then £138m of rates due in 2024/25 will not be collected.

The 93% target is higher than some previous years. The latest LPS Annual Report and Accounts that have been published are for 2022/23 and show that 90.4% of the net collectable liability was brought in (against a collection target of 90.5%).

While the LPS chief executive told the committee that £180.5m of unpaid rates was carried forward at the end of March 2024 – including unpaid rates from previous years that are still being pursued and have not been written off as beyond recovery – she stated that this total had reduced to £119m by 1 December 2024. This corresponds to the accurate figure in Mr Frew’s social media post.

How are unpaid rates bills recovered?

LPS officials told the Finance Committee in December 2024 that the “general approach to legacy debt collection seeks to maximise revenue collection and reduce revenue loss. Agreeing repayment arrangements that are affordable and sustainable for ratepayers ensures that revenue is still collected, albeit at a slower pace, and revenue loss through write-off is reduced.”

If voluntary arrangements cannot be agreed, legal action is taken. Some ratepayers cannot be identified and are unknown. The latest annual report says that:

“LPS matches data with the Electoral Register to identify domestic properties where the owner or occupier is unknown to LPS but is recorded on the electoral register. LPS also makes use of tracing services to identify the owner or occupier of properties where this information is unknown to LPS.”

Whereas £31.6 million of rates were written off in 2013/14, that figure had reduced to £16.9 million in 2034/24.

What’s the early payment discount?

Domestic ratepayers can currently receive a discount of 4% on their overall domestic rate bill if payment is made in full, in a single amount, by a date specified on the rate bill.

If not paid quickly, up front, in full, ratepayers can pay by monthly direct debit, or in full outside the early discount window.   

Are there plans to reduce or cease the early payment discount?

The early payment discount has been highlighted as a possible area of revenue raising for a number of years.

During the most recent collapse of the NI Executive, the Secretary of State for Northern Ireland wrote (on 20 September 2023) to Permanent Secretaries of departments directing that they launch public consultations on specific measures to support budget sustainability by raising additional revenue.

Between November 2023 and February 2024, the Department of Finance consulted on a number of measures related to domestic and non-domestic rating that could raise additional revenue.

The domestic rating proposals were:

 removing the Early Payment Discount

removing Landlords Allowance;

and removing the Maximum Capital Value cap.

The non-domestic proposals were: removing Non-domestic Vacant Rate relief, removing Industrial Derating, removing Freight Transport relief, removing Halls of Residence exemption.

The domestic consultation stated that the early payment discount was:

“[A] longstanding feature of the domestic rating system which was put in place to encourage ratepayers to pay in a single amount early in the rating year as this was administratively less complex and less expensive than managing installments. Over the years, payment by Direct Debit, which is the most efficient method of collection, has become a more popular payment method among ratepayers. In 2022/23, over 158,000 ratepayers (approximately 20%) availed of the early payment discount. The projected cost in 2023/24 is £7.9M. It is paid for entirely by the NI Executive. The cost of this discount fluctuates from year to year, depending on how many ratepayers take advantage of it.”

The consultation document added:

“There is no equivalent discount in the other parts of the UK which have Council Tax and do not offer early payment discounts.”

A summary of consultation responses was published in September 2024 and indicated a majority of those responding to the proposal were in support of retaining the early payment discount.

On 9 December 2024, the Minister of Finance Dr Caoimhe Archibald announced that she would launch a consultation in the new year (January 2025) about two proposals to raise rates income. One proposal was to elevate the Maximum Capital Value on domestic properties from £400,000 up to £485,000 (which would raise an additional £2m). The other proposal going forward for consultation was to reduce the early payment discount from 4% down to 2%.

The Finance Committee was told by LPS officials that this reduction would “raise £4 million”.

Given the length of the normal consultation window, if the changes went ahead, they would only begin to apply to domestic rates bills for 2026/27.

While Mr Frew’s social media post referred to “losing the ability to save money through discount”, to be specific the current proposals announced by the Minister and expected to go out for consultation in January 2025 are about reducing the discount, not removing it entirely.