Northern Ireland (Regional Rates and Energy) Act 2018

Policy background

There has been no Northern Ireland Executive since 9 January 2017, when the then deputy First Minister of Northern Ireland resigned, which also resulted in the First Minister ceasing to hold office. The period for the appointment of ministers to form an Executive after the extraordinary Assembly election in March 2017 was extended to 29 June (by the Northern Ireland (Ministerial Appointments and Regional Rates) Act 2017), but no ministers were appointed. The Northern Ireland Assembly has not met since its first post-election meeting on 13 March 2017. In November 2017, the UK Government addressed the clear and urgent need for budgetary certainty for the Northern Ireland Civil Service by introducing the Northern Ireland Budget Act 2017, an Act that would normally be required to be passed by the Northern Ireland Assembly.
With the parties not having yet reached an agreement on the formation of a new Northern Ireland Executive, this Act makes necessary provisions in light of the continued absence of Assembly business, in order to protect and preserve public services and finances. It enables the collection of regional rates in 2018-19 and the continued operation of the current Renewable Heat Incentive (RHI) cost-capping scheme.

The Act sets regional rates for domestic and non-domestic property for the 2018-19 rating year. It did so by stipulating a regional rate for domestic and non-domestic property, expressed in terms of "pence per pound of rateable value". The figures in the Act represent an inflationary increase in the non-domestic regional rate (based on a 1.5% GDP deflator) and an increase of inflation plus 3% in the domestic regional rate (i.e. a 4.5% increase). These were set out in the Secretary of State’s Written Statement to Parliament on Northern Ireland finances on 8 March 2018,1 and represented an important source of revenue underpinning the 2018-19 budget in Northern Ireland.
Regional rates are normally set by an order subject to the affirmative resolution procedure in the Assembly and made under Article 7 of the Rates (Northern Ireland) Order 1977. It was necessary to proceed by means of primary legislation at Westminster because, in the continued absence of an Executive, these rates could not otherwise be set. The regional rates for 2017-18 were set in the same manner by the Northern Ireland (Ministerial Appointments and Regional Rates) Act 2017.

The Act enables the continuation of cost control measures for the RHI scheme in Northern Ireland. These cost controls regulate rates of return for participants with small or medium biomass installations accredited before 18 November 2015. These installations previously had the capacity to generate costs far beyond projected levels, placing public finances at risk. The original cost control measures were introduced on 1 April 2017 but were due to expire on 31 March, beyond which time cost controls for those installations accredited before November 2015 would have no legal basis. The cost controls reduce the overall cost of the RHI Scheme by around half, protecting the Northern Ireland budget from potentially very significant overspends. The Act therefore provides for the continuation of the 2017-18 cost control measures for a further 12 month period (1 April 2018 to 31 March 2019), during which time work to develop and consult on long term cost control measures will be undertaken by the Northern Ireland Civil Service.