Derry and Strabane Council moves to protect ratepayers from 'unfair burden' of eroded Rates Support Grant

A comprehensive and highly detailed report regarding the Rates Support Grant (RSG), including the outcomes of a recent judicial review and a Ministerial Review, was presented today to members of Derry City and Strabane District Council’s Governance and Strategic Planning Committee. The report addresses the continued significant cuts to the grant and outlined the Council’s proposed next steps.

Members agreed the next steps to addressing the continued significant cuts applied to the grant over recent years, is leveraging the successful legal challenge on rural needs and the Ministerial Review's conclusion that the RSG is still required, and to lobby DfC for a more robust and adequately funded policy intervention that aligns with its original intent.

By way of background information, members of the Committee were informed that the Rates Support Grant is a statutory grant designed to provide financial support to Northern Ireland's District Councils to mitigate the significant impact of the rating system on less wealthy, more deprived, and rural Council areas, ensuring equality of service provision without undue rates impacts. Seven of the 11 Councils are entitled to the grant, with Derry City and Strabane District Council having the highest entitlement.

The report highlighted that the quantum of the grant is discretionary and, as a result, the RSG has been significantly eroded over recent years, rendering it largely ineffective in delivering its original policy objective.

The total Northern Ireland recurrent RSG allocation has dropped from £20.497 million in 2008/09 to £3.124 million in 2024/25 and 2025/26. This includes a 36% (£1.8 million) cut applied in June 2024. Cumulatively, the cuts have had a direct 4.57% rates impact (7.48%) inflation adjusted) on ratepayers across the District. 

The continued uncertainty surrounding future allocations (e.g., for 2026/27) is a major concern for the upcoming rates process and the funding of critical frontline services. The report provided details of the outcome of the Judicial Review taken by Mid Ulster Council (with Derry City and Strabane District Council participating as an interested party) against the cuts applied to the 2022/23 grant. The challenge succeeded on the grounds of the Department's failure to have due regard to rural needs whilst other grounds (irrationality, Section 75 NIA, and want of consultation) were dismissed.

Although the Department was directed to bear the applicant's reasonable costs, the Court granted no order for relief or compensation to the impacted Councils, a disappointing outcome given the finding of failure to have due regard to rural needs.

The Ministerial Review, commissioned by the Minister for Communities to assess if the grant remains fit for purpose, has also concluded. The review, conducted by Business Consultancy Services, focused on the grant's formula and mechanism.

The Lead Finance Officer, Alfie Dallas, presenting the report to the Committee explained how the consultants concluded that the Rates Support Grant is still required in a Northern Ireland and the Department for Communities (DfC) accepted this, though heavily caveated on budget availability.

He said the Council has raised major concern that the review excluded the amount of grant paid from its scope, arguing that a policy is only effective if adequately funded. The Council also stressed that looking at RSG in isolation is flawed without reference to the wider Northern Ireland Rating system, which creates major disparities for less wealthy, more deprived, and rural Councils.

He added the reality is that, without appropriate policy intervention, similar to that provided in other jurisdictions, ratepayers in less wealthy and more rural and deprived Councils such as Derry City and Strabane bear a higher proportion of the rates burden to deliver critical front line services.

IN PICTURES: Santa welcomes families to Hollybush Primary School open day

Principal highlights traditional teaching and strong community links at open event

Hospice Alliance NI welcomes new recommendations to improve palliative care provision

Group urges swift action and close cooperation with department to ensure equitable access to care for adults and children with life-limiting conditions

The review found the RSG formula uses some outdated statistics (e.g. NIMDM 2010), leading to a risk that the formula may not accurately reflect current needs. DfC have accepted the recommendations to update legislation and data sources.

The Lead Finance Officer highlighted a number of concerns arising from the review including a recommendation to work with Councils to develop an assessment of work delivered that would not have been delivered without RSG which misses the fact that the key impact of RSG cuts is not work delivered but higher burdens being placed on ratepayers and lower standards of service provision as compared to more wealthy Councils.

Members attending the meeting voted in favour of a recommendation to write to the Minister for Communities setting out the following: -

• reiterating Councils’ disappointment at the scope of the recent review process in its failure to consider the required quantum of the grant.
• highlighting Council's concern with recommendations within the review, in particular that other specific government funding streams (like City Deals and Neighbourhood Renewal grants) would be mapped and taken into account in future calculations and penalise the least wealthy Councils that successfully secure these other grants for specific deliverables.
• highlighting the significant rates implications that have been absorbed by the 7 impacted Councils over the past number of years. 
• providing Council’s detailed report highlighting the inequities within the NI rating system and the proven reality that ratepayers in less wealthy and more deprived and rural Councils pay a higher proportion of their property values in rates.
• seeking assurance that no further cuts will be applied to the grant for the 2026/27 financial year to enable Council to discharge it’s responsibility to strike a robust rate.
• seeking immediate engagement with the Minister and the wider NI Executive to urgently consider updated policies to ensure funding is provided to Councils based on need in line with that provided in other jurisdictions and
• ensure ratepayers in less wealthy and more deprived and rural Councils do not continue to pay a higher proportion of their property values in rates. 

The Chairperson of the Committee, Cllr Grace Ui Niallais said this action is critical to protect ratepayers in the Derry City and Strabane District Council area from bearing an unfair and increasing burden due to the erosion of this essential financial support.

The recommendation is subject to ratification by Full Council at the end of the month.

Click here for full report.