Defence pay-out to force huge rates bill
Thursday, 23 October 2008
by RICHARD BURDEN
RATEPAYERS in the Armagh area can expect to face a significant 'double figure' blow when next year's estimates come round.
And some projects within the city and district may have to be axed altogether because of a legal ruling in favour of the Ministry of Defence.
Armagh - together with a number of other local authorities - had been boosted by income received through rates payable on vacant Army property. Locally this included Drumadd Barracks and the old Middletown PSNI base.
But it has now been confirmed that Armagh has been hit very hard by a rates review and has been ordered to make backdated payments to the MoD.
The council, therefore, faces increases this year of £750,000 due to the re-evaluation and back payments.
This alone is expected to add between six and eight per cent to the rates next year - and all of that before any other services, capital projects or external forces are taken into consideration.
Armagh Council only recently learned of the reassessment and immediately wrote to Finance Minister Nigel Dodds seeking transitional relief from these payments.
Council chief executive John Briggs explained: "The Land and Property Service, who assess and collect all of the rates in Northern Ireland on behalf of council, attended a council meeting to try and find a solution to this financially damaging review.
“Each year the Land and Property Service advises all councils on the projected income from rates. This is called the Estimated Penny Product. Most years it is cautious and on the low side, meaning some councils get additional income at the end of the financial year when the actual penny product is calculated.
“This year, however, the advice given by the Land and Property Service was overtaken by a court case in which the MoD successfully argued that vacant Army property should be rate free.
“This decision - coupled with increases in vacancies and collection costs - meant that the original estimates were very high and the council must repay money".
The council is now taking emergency action to try and reduce the impact of this financial blow. A report is being drawn up by Mr Briggs and directors giving options on cutting expenditure.
It has been revealed that some of the options could affect council projects and could damage plans to improve the city and district.
Mr Briggs said that while the council had sufficient reserves, these were all committed to projects such as the refurbishment of the Orchard Leisure Centre - which is due to open soon - the completion of the major environmental improvement scheme in the city and other recreational ventures.
He has assured councillors that the reserves are safely invested in a local bank but, because money has been committed to projects, they cannot be used to cushion the rates review.
It is understood that Mr Briggs has advised councillors that this review will have a severe impact on next year's rates. He has indicated that it will be "extremely difficult to avoid a significant double figure rates increase".
Said Mr Briggs: "When you couple these rate charges with other unavoidable increases - such as landfill tax, pension costs, energy costs and the impact of the 'credit crunch' - it is unavoidable that projects could be cut and rates substantially increased".
The council will start the process of reviewing local rates in November and must set next year's estimates by mid-February.
