Market Update: We break down the business implications, market impact, and expert insights related to Market Update: NI’s economy ‘never going to realise potential’ without business rates reform – Full Analysis.
Northern Ireland’s economy is “never going to realise its potential” until problems with our business rates system are addressed, industry leaders have said.
Representatives from the hospitality and retail industries briefed members of Stormont’s Economy Committee today, amid the fallout from a recent attempted rates revaluation exercise.
Back in January, the hospitality industry went into shock when the results of the Land and Property Service’s latest revaluation — called ‘Reval 2026’ — were released.
Sorcha Eastwood calls for VAT cut to save NI hospitality sector: ‘It would have a positive impact on our pubs and allow them to breathe and grow’
Reval 2026 revalued more than 75,000 non-domestic properties, with the new valuations used to calculate businesses’ rates for the forthcoming financial year.
Overall, the exercise saw the total valuation of hotels rise by 85%, while pubs increased by 47%, meaning the rates for many in the hospitality sector were to increase significantly as a result.
However, following a vocal backlash from the sector, Stormont Finance Minister John O’Dowd paused the whole exercise.
Representatives from Hospitality Ulster, Retail NI, the NI Food To Go Association and the NI Hotels Federation (NIHF) appeared before the Economy Committee today.
Janice Gault of the NIHF said the issue with the revaluation is the methodology, which calculates rates on receipts and expenditure, and does not take into account rising costs and other business pressures.
Ms Gault said the situation has resulted in some hotels “taking a pause” when it comes to committing to refurbishment or expansion plans
The cost of a pint is rising – but here’s why that money doesn’t go into the pockets of publicans
“I think some investors are starting to worry about the local landscape, some of the situations within environments that they’re not happy with, and may look at redirecting that investment,” she said.
“A very large amount of the hotel sector is now branded — it’s the international brands, which have standards that they wish to go for.
“Those people will look very carefully before they make an investment.”
Colin Neill, Chief Executive of Hospitality Ulster, said that if John O’Dowd did not act swiftly to pause the revaluation exercise, some of his members would have looked to the Republic to focus their investments.
“I know some of my members straight away thought [when Reval 2026 came out], OK, the Republic of Ireland is the option instead for investment,” he said.
“Their total employment costs are lower than ours, their rates are lower than ours, they’re housing costs are lower than our, so this is one thing that our members continuously look at, and it takes very little to get them to switch to [the Republic] instead.”
Retail NI’s Glyn Roberts said around 25% of retail businesses would have seen their rates increase under Reval 2026, some by as much as 50%, and NI already has the highest business rates in the UK.
“We cannot sustain paying the most expensive business rates in the UK, on these islands, if not western Europe, and ever hope to grow our economy,” he said.
“The Executive has to wrestle with this. We have pointed this out ad finitum to successive finance ministers.
“We need to fix a broken, antiquated, expensive system of business rates, because if we don’t, this economy is never going to realise its potential.”
The industry representatives said the entire rates system needs to be reformed, but in the short term, business rates relief and other support could be brought in.