www.defra.gov.uk
Guidance to Water and Sewerage
Undertakers in relation to Concessionary
Schemes for Community Groups for Surface
Water Drainage Charges and Summary of
Consultation Responses.
December 2010
Department for Environment, Food and Rural Affairs
Nobel House
17 Smith Square
London SW1P 3JR
Telephone 020 7238 6000
Website: www.defra.gov.uk
© Crown copyright 2010
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Information about this publication and further copies are available from:
Defra
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Area 2C Ergon House
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Telephone 0207 238 5846 or 0207 238 4298
This document is available on the Defra website:
http://www.defra.gov.uk/corporate/consult/surface-charges/index.htm
Published by the Department for Environment, Food and Rural Affairs.
Contents
Guidance to Water and Sewerage Undertakers on concessionary
schemes for surface water drainage charges for community groups ...... 3
Introduction ................................................................................................ 3
Background ................................................................................................ 4
The need for a concessionary scheme and the type of concession ..... 5
Defining a community group ..................................................................... 6
Setting an affordable charge ..................................................................... 9
Other customers....................................................................................... 10
Summary of responses to the consultation on draft guidance ............... 12
Introduction .............................................................................................. 12
Summary of Responses .......................................................................... 14
Need for a concessionary scheme and type of concession ................. 14
Summary of responses ........................................................................... 14 Government response ............................................................................ 15
Defining a community group ................................................................... 16
Summary of responses ........................................................................... 16 Government response ............................................................................ 18
Setting an affordable Charge .................................................................. 19
Summary of responses ........................................................................... 19 Government response ............................................................................ 20
Other Customers ...................................................................................... 20
Summary of responses ........................................................................... 20 Government response ............................................................................ 21
General Points .......................................................................................... 21
Summary of responses ........................................................................... 21 Government response ............................................................................ 22
Annex A: List of Responses ....................................................................... 24
Annex B: Legal basis .................................................................................. 28
Annex C: Groups granted exemptions and reliefs from local non-domestic
rating .......................................................................................................... 29
1
Annex D: Estimates of likely impacts in a concessionary scheme.............. 31
2
Guidance to Water and Sewerage Undertakers on
concessionary schemes for surface water drainage
charges for community groups
Introduction
1.1
This guidance is issued by the Secretary of State to water and
sewerage undertakers under Section 43(5) of the Flood and Water
Management Act 2010. It applies to water and sewerage undertakers
that operate wholly or mainly in England. It does not apply to water
and sewerage undertakers that operate wholly or mainly in Wales.
1.2
It covers the need for a concessionary scheme for community groups,
and the implementation and operation of schemes, for surface water
drainage (SWD) charges where these are based on the impermeable
area of sites draining surface water to public sewers. It does not cover
water and sewerage charges more generally. Nor does it cover SWD
charges for household customers.
1.3
Undertakers are required to have regard to this guidance. It should be
read in conjunction with Ofwat’s guidance to undertakers on charges
schemes and the Government’s current guidance to Ofwat 1 on charges
schemes. Ofwat, as the independent economic regulator of the water
industry, will also have regard to this guidance and will ensure that
undertakers have had regard to this guidance in the design of their
charges schemes.
1.4
Section 2 sets out the background to charging for SWD according to
impermeable site area. It covers the problem and consequences of
unaffordable bills faced by some community organisations as a result
of site area charging. It also sets out the legislative solution to this
problem.
1.5
Section 3 provides guidance on concessionary schemes to ensure that
community groups do not face unaffordable SWD bills. Section 4 sets
out guidance on what should count as a community group, including
those classes of community group that the Government believes will
need to be considered by undertakers, as a minimum, for inclusion in
any concessionary scheme.
1.6
Section 5 provides guidance on setting an affordable charge for
community organisations that would otherwise face unaffordable bills
under site area charging for SWD. Section 6 reiterates existing
1
Water Industry Act 1999 – Delivering the Government’s Objectives, DETR, 2000 (Product
Code: 99EP0883).
3
guidance on site area charging for customers that are not community
groups and therefore fall outside any concessionary scheme.
1.7
The legal basis for this guidance is provided at Annex B. Annex C lists
those organisations that were granted exemptions or reliefs from local
non-domestic rates and therefore benefitted from concessions where
SWD charges were levied according to rateable value. Annex D, which
is not part of this guidance, provides some indicative estimates of the
likely impacts and cross-subsidy involved in a concessionary scheme.
Background
2.1
SWD charges are the charges that water and sewerage undertakers
levy for the removal and treatment of rain that falls on impermeable
areas such as roofs and car parks etc and drains into public sewers.
Historically these charges for non-household customers have typically
been based on the rateable value of a property.
2.2
Many community groups were either exempted from local nondomestic rates under Schedule 5 of the Local Government Act 1988
(this is set out at Annex C), benefitted from mandatory or discretionary
relief or simply had a low rateable value. This meant that these groups
paid no charge, or paid a low charge, for SWD. The cost of paying the
SWD charges of these groups was met by other water customers in an
undertaker’s operating area.
2.3
Ofwat, as the independent economic regulator of the water industry, is
encouraging undertakers to switch to charging for SWD according to
impermeable site area. Ofwat’s view is that it is the most fair and costreflective way of charging – the larger a site area, the greater the cost
of removing and treating surface water from premises. It also provides
a direct financial incentive to reduce surface water run-off through, for
example, the installation of sustainable drainage systems.
2.4
Whilst the switch to site area charging is revenue neutral for an
undertakers’ customer base as a whole, the switch to site area
charging in some parts of England has resulted in community
organisations with premises that have large impermeable site areas,
such as churches, village halls, and community amateur sports clubs,
facing substantial and unaffordable increases in their water bills.
2.5
The Government supports site area charging for SWD in principle, the
need to reduce surface water run-off and the importance of promoting
sustainable drainage systems.
However, any substantial and
unaffordable increases in SWD charges for community organisations
would risk these organisations closing or cutting back significantly on
the valuable services that they provide to society. The Government’s
view is that this would not be in the public interest.
4
2.6
To overcome these competing objectives, the Government has brought
forward legislation to allow undertakers to operate concessionary
schemes for community groups for the purpose of SWD charges. The
Government hopes that this will encourage undertakers to switch to site
area charging whilst ensuring that community organisations do not face
unaffordable SWD bills.
2.7
The legislation included in the Flood and Water Management Act 2010
does not make it compulsory for a concessionary scheme to be
introduced. Enabling legislation, rather than a requirement to bring
forward concessionary schemes, was proposed so as to maintain the
current arrangements in the Water Industry Act 1991 under which
undertakers devise their own charges schemes for their customers in
light of local circumstances. These are then approved by Ofwat as the
industry’s independent economic regulator. As part of this process,
Ofwat will ensure that undertakers have had regard to this guidance.
2.8
The Flood and Water Management Act does not prescribe which
community groups must be included in any scheme. The legislation
can potentially apply to any organisation that benefits its local
community.
However, many organisations benefit their local
community. The legislation therefore enables the Secretary of State to
issue guidance to undertakers which operate wholly or mainly in
England in respect of concessionary schemes. This is designed to
make it clear exactly which classes of community organisations the
Government believes to be appropriate for inclusion in concessionary
schemes whilst, at the same time, allowing undertakers flexibility to
take account of local circumstances.
The need for a concessionary scheme and the type of
concession
3.1
The Government is clear that it does not want to see community groups
facing unaffordable increases in their water bills as a result of site area
charging for SWD.
3.2
Undertakers that choose to bring forward a concessionary scheme as
the basis for ensuring that community groups do not face unaffordable
water bills will need to consult their customers and their representatives
in deciding whether one is needed and, if so, on the design of a
concessionary scheme. This consultation should include groups and
organisations which would not benefit from a concession as well as
those groups that potentially would benefit.
3.3
To ensure that the full range of customer views are heard, this
consultation will need to include the Consumer Council for Water,
which represents water and sewerage customers as a whole.
Undertakers will need to have regard to all of the representations
received and Ofwat will ensure that this is the case.
5
3.4
As part of the consultation process, undertakers will need to carry out
an impact assessment and make this available to customers. Where
SWD charges are levied according to site area and a concessionary
scheme is not proposed, the impact assessment will need to show that
community organisations will not face unaffordable SWD charges.
3.5
Where a concessionary scheme is proposed, this impact assessment
will need to include an estimate of the amount of cross-subsidy
involved. This will be influenced by the type of concession offered, the
magnitude of the concession and the classes of community group that
benefit.
3.6
Where a site area charging scheme is structured in a way that charges
all non-household customers a low charge for SWD, an undertaker
may conclude that a concessionary scheme is unnecessary. A
charges scheme on this basis would be in line with this guidance.
3.7
Alternatively an undertaker may decide to levy charges for SWD which,
whilst affordable for most of its non-household customers, could risk
being unaffordable to community organisations.
In such
circumstances, the Government would expect undertakers to consider
making use of the legislative provision in the Flood and Water
Management Act for a concessionary scheme for community groups.
3.8
It is for individual undertakers to decide what type of concession to
bring forward. Where charges are levied by bands according to the
size of the impermeable site area of a premises, undertakers may
choose to place community organisations in a concessionary band that
would cap their charge.
3.9
Undertakers will need to decide whether any cross-subsidy that
community groups receive is met only by non-household customers or
by the undertaker’s customer base as a whole. The Government’s
view is that the cost should preferably be shared across both
household and non-household customers as society as a whole
benefits from the excellent work of community organisations.
3.10
Where highway drainage charges are bundled with site area charges
for SWD charges, the Government expects any concessionary scheme
for SWD charges to include the element of highway drainage.
3.11
Undertakers that charge for SWD according to impermeable site area
will continue to take decisions on, for example, the number of charging
bands that apply in their scheme of charges and on the magnitude of
the charge that applies in each band. These will continue to be
scrutinised by Ofwat in its approval of individual charges schemes.
This guidance makes no recommendations on these issues.
Defining a community group
6
4.1
4.2
Where an undertaker brings forward a concessionary scheme for
community groups, the Government proposes that the undertaker
should apply the following criteria to help determine which classes of
community group, and individual groups within a qualifying class,
should benefit:
-
groups which benefitted from an exemption or concession when
SWD charges were levied according to rateable value and/or would
face a significant increase in bills as a result of site area charging;
-
groups which benefit the community, i.e. there must be an
identifiable social benefit or benefits;
-
are run as not-for-profit organisations, ie the organisation does not
exist for commercial reasons and that its shareholders, trustees or
others do not benefit financially from the activities of the
organisation; and
-
are non-Governmental and non-political, i.e. excludes central and
local Government departments and agencies, political groups and
political parties.
Based on these criteria, the Government expects that undertakers will
want to include the following classes of community group in any
concessionary scheme for SWD charges:
-
places of public religious worship;
-
properties owned by Scout and Guide Associations and similar
youth or children’s groups;
-
community amateur sports clubs and similar types of sports club;
and
-
village and community halls, community centres and similar
buildings owned or leased by community associations.
4.3
These groups all provide clear benefits to the local communities which
they serve. At the same time, they are the organisations that have
been most adversely affected by the switch to site area charging for
SWD and are most likely to face unaffordable bills as a result.
4.4
The Government recognises that some community groups do not own
the properties that they occupy (for example, a village hall could be
leased from a local authority or a faith building may be owned by a
regional or national trust). However, any community organisation that
is responsible for paying the water and sewerage bill of the property
that it occupies should be included in a concessionary scheme where
that class of community group is included.
7
4.5
The Government is aware that some premises belonging to the
community groups listed in paragraph 4.2 may be used for commercial
purposes (for example, a community centre could be used on occasion
to host commercial functions that raise money). The Government’s
view is that this should not exclude an organisation from inclusion in a
concessionary scheme provided that the organisation is recognised as
being not-for-profit.
4.6
Some charities will be included in those classes of community group
identified in paragraph 4.2. However, charities include many different
classes of community group. These can include charity shops, large
charitable organisations, museums, theatres, historic buildings, dogs
and cats homes, private schools and private hospitals.
4.7
The Government does not recommend that all charities should
automatically be included in any concessionary scheme. Not all
charities face disproportionate increases in their SWD bills. Some
charities with a high rateable value but a small site area (such as a
charity shop in a town centre) may see their bill reduced as a result of
the switch to site area charging. Conversely, charities with large site
areas such as some museums may face substantial increases in SWD
bills from site area charging.
4.8
The Government proposes that undertakers should take account of the
criteria in paragraph 4.1 and use their impact assessment and
consultation with interested parties to reach a final decision on which, if
any, classes of charities to include in a concessionary scheme in
addition to the community organisations identified at paragraph 4.2.
This will need to specifically estimate the amount of cross-subsidy that
would be involved if different classes of charity are included and the
acceptability of this cross-subsidy to the undertaker’s customers.
4.9
There will be other community groups within an undertaker’s operating
area that are not charities but which satisfy the criteria set out in
paragraph 4.1. This could include social clubs, hospitals, schools,
nursing homes and care homes. The Government does not believe
that groups such as these should be included in any concessionary
scheme for SWD charges except on a transitional basis.
4.10
Such organisations typically have relatively high water and sewerage
bills, and much higher operating costs than the organisations listed in
paragraph 4.2. They are therefore more likely to able to absorb the
cost of SWD charges or to pass them on. Including them could
significantly increase the amount of cross-subsidy paid for by other
customers to unacceptable levels. Undertakers may want to consider
including organisations such as these in a concessionary scheme on a
transitional basis as part of the phasing-in of site area charging. This is
a decision for undertakers. However, the amount of cross-subsidy
involved could preclude this.
8
4.11
Undertakers will need to establish what an acceptable level of crosssubsidy is as they develop a concessionary scheme. It must be borne
in mind that increasing the number of classes of community groups that
benefit from a concession will mean that other customers will face
higher bills to provide the cross-subsidy for these groups. The amount
of cross-subsidy will need to be estimated in an undertaker’s impact
assessment. It must be at a level that is generally acceptable to its
customers as a whole, and subject to consultation as previously
outlined.
4.12
Annex D, which is not part of this guidance, provides some illustrative
estimates of the amount of cross-subsidy that may be involved in a
concessionary scheme. The amount of cross-subsidy will depend on
an undertakers’ customer base, its charges scheme (including both its
SWD charges and the proposed concession) and the cost of removing
and treating surface water. Annex D also provides some illustrative
information on customers’ willingness to cross-subsidise other
customers.
4.13
The Government recognises that some household customers struggle
with their water and sewerage bills. However, granting a concession to
those community groups identified in paragraph 4.2 is likely to have a
relatively small impact on the bills of other customers. Further, the
most vulnerable members of society who may find it most difficult to
pay their bills are often those who benefit the most from the work of
community organisations. They would be most affected if these
organisations closed down or cut back on the services they provide.
4.14
The Government is clear that there should be no discrimination by
undertakers within particular classes of community group. If a specific
class of community group is included in a concessionary scheme then
all individual premises within that class in the undertaker’s operating
area should be able to benefit from the concessionary scheme
provided that they meet the qualifying criteria.
4.15
The Government does not propose that undertakers should apply
means testing in determining eligibility for inclusion in a concessionary
scheme for individual community groups. Whilst there are some
individual community groups with large premises that could afford to
pay their SWD bills in full, this group is a very small minority. The
legislation therefore covers all individual groups within a particular class
of community group for inclusion in a concessionary scheme. This has
the advantage of keeping concessionary schemes straightforward to
administer, both for undertakers and for community groups.
Setting an affordable charge
5.1
Whilst it is relatively straightforward to identify an unaffordable charge
when one is incurred, it is difficult for the Government to provide a
definitive view on what might constitute an affordable charge. The
9
Government’s view is that this is a matter of judgement which can only
be addressed and resolved in the design of an individual charges
scheme by an undertaker.
5.2
The actual charge will depend fundamentally on an undertakers’
customer base, the actual costs of removing and treating surface water
in an undertaker’s operating area and the level of cross subsidy that
other customers feel is acceptable. These will need to be considered
in individual undertakers’ impact assessments and in light of the views
of customers and representative consumer organisations. What may
be affordable for one class of community group may be unaffordable
for another.
5.3
Undertakers will need to decide what concession to grant community
groups so that they do not face unaffordable SWD bills. The Flood and
Water Management Act does not allow for zero charges in any
concessionary scheme. The Government is firmly of the view that all
groups that make use the public sewer system for the removal and
treatment of surface water should make a contribution to the cost of
this service. However, the Government wants this contribution to be
affordable for community groups. Individual customers are often able
to reduce their surface water drainage charges by reducing their
surface water run-off where this is possible.
5.4
The Act also enables undertakers to grant different concessions to
different classes of community group. It is for undertakers to decide
what concession to offer following consultation and after undertaking
an impact assessment and having regard to this guidance. However, it
may be more straightforward to grant the same concession to all
classes of community group that are included in a concessionary
scheme.
5.5
The Government expects all undertakers to be responsive to the needs
of their customers. Where an undertaker does not include particular
classes of community groups in its concessionary scheme, the
Government would encourage the undertaker to consider using its
hardship or charitable fund (where these exist) to assist individual
premises, if necessary, on a case-by-case basis.
5.6
Ofwat will ensure that undertakers have regard to this guidance,
including consulting customers and undertaking impact assessment, in
its approval of undertakers’ charges schemes. In particular, Ofwat will
ensure that, where a concessionary scheme is operated, a fair balance
has been struck between the views of an undertakers’ customer base,
the concession offered and the affordability of SWD charges to
community groups.
Other customers
10
6.1
The Government recognises that some non-household customers that
are not community groups have seen significant increases in their
Sewerage bills as a result of some companies switching to site area
charging for SWD. The Government expects to see fair treatment for
non-household customers. This includes both business and nonbusiness non-household customers.
6.2
Whilst the Flood and Water Management Act does not allow for noncommunity groups to be included within the scope of a concessionary
scheme, the Government recognises that stability and predictability in
bills can be important for all customers.
6.3
The Government would reiterate the position expressed in guidance
issued in 2000 2 that, where their use of water services does not
change markedly from one year to the next, customers have a
legitimate expectation that bills should not increase disproportionately
in a short period of time. For this reason the Government strongly
recommends that undertakers consider the phasing-in of, and the
appropriate pace of, any large or sudden increases in SWD charges,
particularly for small business customers with large impermeable site
areas.
6.4
The Government would also reiterate the position expressed in the
2000 guidance that site area charges should only apply to impermeable
areas. Premises with large permeable areas such as grass fields and
burial grounds that do not drain into public sewers should not count
towards impermeable areas under site area charging.
6.5
The Government believes that consultation with customers is key to
establishing charges schemes that are acceptable to all, but
appreciates the potential costs of consultation. We therefore believe
that consultation should be proportionate to the level of charges and
cross subsidy for other customers. We also encourage companies,
where possible, to consult alongside other issues in order to minimise
costs.
6.6
The Government expects undertakers to take the initiative in working
with their customers to ensure that site areas are calculated accurately
for the purpose of site area SWD charges.
2
Water Industry Act 1999 – Delivering the Government’s objectives, DETR, (Product Code:
99EP0883), February 2000.
11
Summary of responses to the consultation on
draft guidance
Introduction
In July 2010, the Government issued a consultation paper inviting views on
proposed guidance to water and sewerage undertakers in England in relation
to concessionary schemes for surface water drainage charges for community
groups. The consultation ran from 12 July to 22 October. The guidance set out
will give effect to provisions made in Section 43 of the Flood and Water
Management Act 2010.
The powers in Section 43 of the Act are enabling and provide that a water and
sewerage undertaker may bring forward concessionary surface water
drainage schemes for community groups as part of their charges schemes
which are compatible with the regulator’s requirement that charges schemes
are not unduly preferential or discriminatory.
The legislation provides that the undertaker may determine which classes of
community groups should benefit, what they may class as a community group,
what reduction in charges to allow and what different reductions may be made
for different groups. The charges may not be reduced to nil and concessionary
groups may only benefit from a charge used for general purposes.
The legislation also provides that the Government may issue guidance to
undertakers to which they must have regard in the application of any
concessionary schemes that they decide to introduce.
The consultation was brought to the attention of over 40 organisations
including not for profit organisations representing faith groups, amateur sports
clubs, Scouts and Girl Guides groups and community buildings. In addition to
this, views were sought from Ofwat, the independent economic regulator of
the water industry, the Consumer Council for Water, the consumer body that
represents water customers in England and Wales, and the 9 water and
sewerage companies operating in England.
In total, Defra received 173 responses to the consultation. This included 108
from places of worship, 32 sports clubs, 7 parish halls and councils, 8 water
companies and a range of other organisations such as Ofwat, the Consumer
Council for Water, the Scout Association, the Churches’ Legislation Advisory
Service, Action for Communities in Rural England and the Central Council of
Physical Recreation. A full list of respondents is provided at Annex A.
The summary of responses is intended to represent the main points of
consultees’ responses relevant to the different sections of the guidance
covered in the consultation. It has not been possible to address all aspects of
each response, which were wide-ranging. However, copies of individual
12
responses will be supplied on request to personal callers 3 or in response to
telephone (0207 238 6575) or email requests ([email protected]).
3
Information Resource Centre, Defra, Nobel House, Smith Square, London SW1P 3JR
13
Summary of Responses
Need for a concessionary scheme and type of concession
Summary of responses
The majority of responses from individual community groups and bodies
representing them, highlighted the important role community groups play in
society. These responses noted that given the Government’s emphasis on the
Big Society, there should be greater recognition of the services these groups
provide and the financial constraints under which not-for-profit groups operate.
Further to this, these responses highlighted that any additional costs imposed
on community groups, many of which already run to tight budgets, would
impact on their ability to provide services to the community.
Whilst the majority of responses welcomed legislation providing for
concessionary schemes (and in fact none of the responses objected to the
principle behind this) a number of responses from community groups and
organisations representing them argued that it should be mandatory for
companies to run concessionary schemes. Concerns were raised by these
respondents that the draft guidance was too weakly worded and allowed too
much room for companies to resist running concessionary schemes.
Responses indicated that there should be no ambiguity in the guidance. Some
water companies expressed in their responses that it was right that
undertakers should make decisions about whether or not to run a
concessionary scheme.
Amongst individual community groups and representative bodies, a common
concern was the concept of a “postcode lottery” if some companies decided to
implement concessionary schemes whilst others did not.
In addressing how companies should assess the need for a concessionary
scheme several respondents suggested that the presence of eligible groups in
the operating area should be enough reason to run a scheme.
Many respondents agreed that it would be necessary to carry out an impact
assessment to assess the affordability of charges to community groups and
the impact of a concessionary scheme on other customers. Some
respondents also commented further clarity was needed around how impact
assessments would be monitored. Individual groups were concerned that
specific types of community groups within an operating area should be
consulted. One respondent commented that water companies should
proactively seek views from affected groups and that simply advertising on a
company’s website would not be enough.
However, it was noted by some water companies that a consultation process
could be potentially costly and burdensome on companies and Thames Water
suggested that if the impact on other customers was likely to be very low,
consultation should not be necessary. In particular, Southern Water noted that
14
billing systems would make it difficult for companies to identify and proactively
target community groups as part of a consultation.
Yorkshire Water and Severn Trent Water’s responses indicated that a
retrospective assessment of the need for a scheme should not be necessary
where a charges scheme has already been implemented successfully with
little or no objection from customers but that if changes were to be made a
consultation would be necessary.
Northumbrian Water’s response stated that guidance should clarify
circumstances in which it would not be appropriate to run a scheme, for
example, where there is no willingness amongst other customers to crosssubsidise bills or it is considered that proposed charges would not pose an
affordability concern to community groups.
Ofwat made some specific comments on points on this chapter in its
response, stating that language in 3.6 and 3.8 seems to indicate that charges
can be structured to ensure a low SWD charge for all non-household
customers and as such should be modified to clarify that charges must be
cost reflective and cannot be structured to favour one group over another. It
also stated that 3.10 implies that a percentage discount could be given to
those eligible (and indeed, several other respondents suggested that such a
concession may be appropriate) but that the legislation does not provide for a
discount of this kind.
Finally, Ofwat also noted that there was some confusion around the split
between highways drainage (HWD) and SWD charges given that the
legislation only seems to cover SWD but 3.12 states that the concession may
apply to HWD where this charge is included in the SWD charge. Ofwat
therefore suggests that any reference to HWD charges should be removed for
clarity. Conversely, other respondents welcomed the inclusion of HWD
charges as part of concessionary schemes.
Government response
Government recognises the important role that community groups play in
society and the tight budgets within which many community groups operate.
We are therefore sympathetic to the responses we received from community
groups expressing that concessionary schemes should be mandatory.
However, Section 43 of the Flood and Water Management Act is an enabling
power and as such concessionary schemes cannot be made mandatory under
this legislation.
We believe that companies are best placed to assess the need for a
concessionary scheme within their own operating areas based on consultation
with customers and community groups who would be affected by a switch to
site area charges. Government is clear that community groups should not face
unaffordable water bills and as such we expect that all companies will
consider the need for a concessionary scheme if they have, or are planning
to, switch to site area based SWD charging.
15
It is the responsibility of the water company to clearly explain its charges to its
customers and to be active in maintaining a sustainable relationship with its
local consumers. However, we recognise that consultation with customers
may be expensive. We believe that consultation with customers is key to
establishing acceptability of charges, however, given that the costs of this will
be passed onto other customers, consultation should be proportionate to the
level of cross subsidy and proposed charges. Where companies have already
switched to site area charging with no adverse reaction, or the impact of
running a concessionary scheme is minimal to other customers, they should
consider the level of consultation and benefits alongside costs to other
customers. We encourage companies to consider consulting customers,
where possible, alongside other issues such as, for example, future social
tariffs order to minimise costs to customers.
We agree that when consulting, companies should actively seek the opinions
of affected customers and the wider customer base. However, we recognise
that water and sewerage companies can hold limited information about their
customers and in some instances it may be prohibitively expensive for
companies to obtain this information. We would therefore consider any
changes in charges schemes and planned consultations should be proactively
advertised by companies, but that it is the responsibility of individual
customers to familiarise themselves with information that companies make
public.
With regards to Ofwat’s specific points, Government understands that Ofwat
cannot show undue discrimination or preference in the approval of charges
schemes. Paragraphs 3.6 and 3.8 are intended to demonstrate that it is for
companies to structure their charges schemes as they see fit, and assess the
need for concessionary schemes depending on the impacts of their proposed
charges schemes. However, we recognise that paragraph 3.6 may be
misconstrued and therefore propose to omit this from the final guidance.
Paragraph 3.10 implies that a percentage discount could be awarded,
however, Ofwat’s analysis of the legislation is correct and as the legislation
does not provide for this, we agree that references to such discounts should
be omitted from the guidance. We have therefore deleted paragraph 3.10 of
the guidance.
With regards to Ofwat’s final point about the inclusion of highways drainage
charges, paragraph 3.12 refers to surface water drainage charges which
include highways drainage charges, i.e. the company has bundled the two
charges together within its charges scheme, which they are able to do. We
therefore think it is right to address this in the guidance and do not want to see
community groups facing unaffordable highways drainage charges.
Defining a community group
Summary of responses
16
The majority of consultees broadly agreed with the definition of a community
group as set out in the draft guidance. Responses also indicated support that
those groups identified as the minimum to whom concessionary charge
should apply, though not as a definitive list. Several respondents reiterated
that a distinction should be made between community groups and other nondomestic water customers and CC Water stated that there was broad support
within household customers for this approach.
A number of individual community groups and their representative bodies
made the case for the eligibility of their specific types of organisation. Further
to this, some representations from sports organisations argued that
Community Amateur Sports Club (CASC) status should not be the only
passport through which an amateur sports club could prove eligibility.
Regarding the specific issue of eligibility of registered charities, a number of
responses suggested that a clearer indication was needed of which charities
to include in concessionary schemes, because of the general nature of this
group. Independent Methodist Churches’ response stated that all registered
charities should benefit from concessionary schemes.
Two responses referred to the inclusion of schools and hospitals in
concessionary schemes. Southern Water stated in its response, that there
was a need for consistency in that schools and hospitals should not benefit in
some areas and not in others. Severn Trent Water suggested that its current
policy of keeping schools and hospitals on RV charges and transferring them
to site area charging as and when premises are replaced, was the most
appropriate long term solution. They added that phasing in of site area
charges would probably still leave such organisations with unaffordable bills.
A number of responses indicated the need for a clear eligibility criteria in order
to avoid disputes and some argued that decisions around eligibility counted as
social policy and as such, Government should set this. A degree of
nervousness was also expressed from those in the voluntary sector that
companies are ultimately given carte blanche to decide who should benefit
whilst some companies felt that it should be reiterated that it would be
ultimately for the company to decide.
Some specific suggestions around the eligibility criteria included consideration
of the benefit a group to the community as a whole and do not discriminate,
including with regards to membership and joining fee and that organisations
should be not-for-profit. By contrast, one response indicated that where
organisations make a profit that is reinvested in the organisation, this should
not exclude them from eligibility. Thames Water stated that the size of an
organisation should be considered as part of deciding whether or not it might
be eligible.
In addition to this, several responses made reference to the need to establish
a criteria that did not exclude groups that used premises owned by a
commercial organisation where they were responsible for bill payment.
17
United Utilities response suggested that its own eligibility criteria is a useful
way of establishing eligibility for any concessionary scheme depending on the
type of organisation. The criteria sets provides that eligible sports clubs must
be:
•
•
•
a CASC; or
must not charge joining fees of more than £100 or membership fees of
more than £400 per year; and
does not pay a fee to any members to play at the club.
In addition to this, in considering applications, the company asks that the club
provide supporting information setting out whether or not the organisation:
•
•
•
is established primarily to provide facilities for and encourage
participation in eligible sports;
is open to whole community without discrimination; and
profits are not redistributed to members and reinvested in the club.
For village halls and community centres, United Utilities eligibility criteria
states that:
•
•
•
all profits must be reinvested in the organisation;
the organisation is open to the whole community without discrimination;
and
the organisation does not receive all of its funding from local
government.
Several responses, including Ofwat’s, argued that means testing would be a
more appropriate way of establishing that only those with genuine affordability
concerns should benefit from concessionary schemes. Otherwise, a more
general approach may result in low-income customers subsidising groups that
are able to pay charges.
Government response
We agree with those responses that indicated the need for clear eligibility
criteria in order to avoid disputes, and we understand the concerns of
community groups regarding eligibility. However, we believe that aside from
those set out in guidance as the minimum groups to whom concessionary
schemes should be made available to, companies are best placed to decide
this based on consultation with customers. This is because there may be
higher numbers of the kind of organisations who might benefit within different
operating areas and there must be a willingness from other customers to
subsidise these groups. With this in mind, we also think that the approach
taken in establishing whether or not schools and hospitals should be
determined through customer consultation.
We do not agree that all registered charities should benefit from
concessionary schemes, because some charitable organisations are larger
than others and may have mechanisms in place through which they are more
18
able to absorb costs than smaller community based charitable organisations.
This could also lead to unintended consequences such as low income
customers subsidising the bills of clubs or organisations that charge high
membership fees, for example.
We recognise that means testing would be a useful way to establish
affordability concerns of individual groups. However, given the administrative
burden that this would place on both companies and customers applying for
relief, we do not think that testing eligibility in this way would offer good value
for money and it would be extremely difficult to establish a fair and practical
threshold for eligibility.
We see merit in the approach that United Utilities have set out as eligibility
criteria for their recent moratorium, building on the approach taken by
Government, and think that this would largely capture the kinds of
organisations that a company might wish to offer concessionary schemes to.
With regards to the issue raised about eligibility of groups who do not own
premises but are responsible for paying the bill, as set out in paragraph 4.4
and 4.5 of the draft guidance we agree that those community groups who are
responsible for bill payment should be eligible, regardless of whether or not
they own the property. Similarly, we do not rule out the eligibility of groups
whose premises are used for commercial purposes provided that the group is
not for profit, which should be key to assessment made by companies around
eligibility.
Setting an affordable Charge
Summary of responses
The majority of responses to this section of the consultation document noted
that affordability will vary between different organisations and that consultation
with customers would be key in establishing this.
Some respondents expressed concerns that companies should be left to
decide this and that Ofwat would ultimately act as arbitrator over any
disagreements regarding this. Similarly, some responses argued that
Government should decide what might constitute and affordable charge for
organisations. However, a few respondents argued that discretion should be
allowed for undertakers to establish charges.
Some specific ideas regarding how an affordable charge might be calculated
were submitted in response to the consultation, however, a number of
respondents believed that in the interests of fairness, charges should at least
be comparable with charges for domestic customers. Specific ideas included
setting the charge at:
•
a maximum of Severn Trent Water’s 100-250m2 band;
19
•
•
•
•
•
•
•
•
a separate community group band of between 95% less than the
average business charge and 80% more than the average domestic
charge;
a maximum of £30;
5% of the maximum company charge based on impermeable areas;
capped at household levels;
25-50% of standard business charges;
no more than the organisations water bill;
no more than an increase of 5% in real terms; and
reintroduce zero rating.
A couple of responses from companies stated that the actual cost of the bill
was less significant to individual groups than ensuring that bills remain stable
and customers do not face a sudden increase.
Some customers expressed concern over a charge that was calculated as a
percentage of existing charges and suggested that a flat rate would be more
appropriate. Ofwat challenged whether or not the legislation would in fact
provide for a charge based on anything other than bands, rather than a
percentage discount.
Government response
We agree with the general view expressed by respondents that affordability of
a charge will vary between different customers. For this reason, we believe
that consultation with affected community groups will be key to decisions
made around this.
We welcome the specific proposals put forward by respondents and would
encourage undertakers to consider these proposals in setting charges
schemes. However, the legislation provides that companies may establish
charges for concessionary schemes, rather than Government. Under the
existing regulatory framework it is for companies to propose charges schemes
and for Ofwat to scrutinise and approve or reject charges schemes, taking into
account their general duties. We believe this is the right process for setting
charges, including concessionary schemes, whereby companies propose
schemes that reflect their own individual circumstances and Ofwat, as the
independent economic regulator, ensures that charges are in accordance with
the legislative framework as amended by Section 43 of the Flood and Water
Management Act. It would therefore be inappropriate for Government to
intervene in this process.
Other Customers
Summary of responses
20
Several responses indicated a concern that companies might decide not to
run a concessionary scheme in the face of an adverse reaction by other
customers. United Utilities stated that Defra should clarify how companies
would address concerns from other customers paying for the scheme.
Again, many responses indicated that an impact assessment would be key in
determining willingness of other customers to pay and to determine an
acceptable level of cross subsidy. Northumbrian water stated that if there is a
lack of willing from other customers to cross subsidise community groups, a
concessionary scheme for such customers would be inappropriate.
The Consumer Council for Water were particularly concerned that there
should be a limit on what other customers should pay and that low income
customers should be considered. CC Water also noted that the cumulative
effect of other cross subsidies existing within the water charges should be
taken into account.
Both Severn Trent Water and Thames Water supported the view that
domestic and non domestic customers should subsidise concessionary
schemes.
Government response
As with the issue of setting an affordable charge, we agree that consultation
with customers is key to establishing what level of cross subsidy other
customers should pay. We believe that the cross subsidies involved in running
a concessionary scheme are likely be minimal and as such, doubt that this
should pose a great issue. However, companies will need to carefully balance
setting affordable charges for community groups and expectations on other
customers to subsidise this.
We agree with the Consumer Council for Water’s view that it will be necessary
for companies to consider the cumulative effect of existing and new cross
subsidies for other customers, in setting a charge that is affordable to
community groups and other customers.
General Points
Summary of responses
Several general points about the draft guidance were also raised. Many
responses from individual groups and others objected to the concept that any
customer might reduce their surface water drainage charge to zero if
sustainable drainage systems were installed. Depending on the structure of a
company’s charges scheme (for example, if it included a highways drainage
charge) this might not be possible. In addition to this, community groups
argued that this assumed it would always be possible to install such devices,
where in older properties this may not be practical and others may not have
the funds required to carry this out. Some responses indicated that advice on
21
how a community group might reduce its charge would be useful and that
companies might consider making grants available for such purposes.
Northumbrian Water raised an issue with the concept of an “impermeable
area”, and suggested that the guidance might reword this because there were
inconsistencies between different interpretations of what might count as
“impermeable”.
Many responses expressed that there should be an appeal process in place to
deal with potential disputes between customers, companies and Ofwat
regarding eligibility for schemes and discounted charges.
The Consumer Council for Water noted that for companies who wished to
have 2011 charges signed off by Ofwat in January 2011 (as is standard in the
charges approval system), there would be little time available for them to
conduct impact assessments and that the guidance should address interim
measures.
Thames Water noted that the legislation refers to SWD charges but not site
area charges specifically and so concessions could in theory apply regardless
of whether or not a company had moved to site area charging.
Government response
In response to the concerns raised by some respondents regarding paragraph
5.3 of the draft guidance, we have amended the language to recognise that,
for many reasons, some customers cannot reduce their SWD charge to zero.
With regards to requests for advice on retrofit of sustainable drainage systems
to reduce surface water run-off, Defra is currently working with the
Construction Industry Research Information Association (Ciria) to develop
guidance for “Retrofitting Surface Water Management”. This is likely to be
published by Autumn 2011. Defra is also looking at ways to encourage
sustainable drainage retrofit on an household and community level for
potential inclusion Water White Paper, which will be published next year.
With regards to Northumbrian Water’s point around “impermeable areas”, we
recognise their concerns around this language, however, for the purposes of
clarity and in the absence of a better definition, we propose to continue to use
“impermeable”. However, we take this opportunity to clarify that
“impermeable” means surface area which surface water does not drain
naturally through and instead runs off into the public sewer network and that it
is for companies to determine what they regard as permeable and
impermeable surfaces.
Turning to the concerns raised regarding an appeals process to deal with
disputes arising between customers and companies or Ofwat, legally,
companies and Ofwat is required by Section 43 of the Flood and Water
Management Act to have regard to Government guidance. Aside from this,
there are already systems in place for customers who feel that they have been
22
treated unfairly and as such do not feel it is appropriate to establish new,
potentially costly systems.
CC Water rightly pointed out that companies will have little time to consult with
customers regarding concessionary schemes prior to approval of next years’
charges schemes and felt this should be addressed in the guidance. We are
unable to address this specific point in Government guidance, however, we
encourage companies to consider interim measures ahead of the 2012/13
charging year if concessionary schemes cannot be put in place by the start of
the 2011/12 charging year.
Finally, with regards to Thames Water’s query about legislation potentially
applying to site area charges calculated by the RV method, given that eligible
groups will benefit from either zero rating or relief and that the legislation
provides that charges must not be reduced to nil, it would not be appropriate
to run concessionary schemes for customers charged on this basis.
23
Annex A: List of Responses
1. East Bolton Methodist Church
2. West 2nd Methodist Church, Hexham
3. Corbridge Methodist Church
4. Slaley Methodist Church
5. Catton Methodist Church
6. Spring Cottage
7. Ponteland Methodist Church
8. Stakeford Methodist Church
9. Trinity Church, Bedlington
10. Bedlington Colliey Methodist Church
11. Saint Columba’s Methodist Church
12. Fulwell Methodist Church
13. Castletown Methodist Church
14. The Church of the Good Shepherd
15. Berwick Methodist Church
16. Jesmond Methodist Church
17. Seahouses Methodist Church
18. Seaton Sluice Methodist Church
19. Allen Memorial Methodist Church
20. Coxlodge Methodist Church
21. Milbourne Methodist Church
22. Milfield Methodist Church
23. Burn Park Methodist Church
24. Scots Gap Methodist Church
25. St Pauls Methodist Church
26. Monkseaton Methodist Church
27. Whitburn Methodist Church
28. Cowgate Methodist Church
29. Cullercoats Methodist Church
30. North Shields Methodist Church
31. Church of St John the Evangelist
32. Denton Burn Methodist Church
33. Trinity Methodist Church
34. Harton Methodist Church
35. Blucher Methodist Church
36. Hetton Methodist Church
37. Lemington Methodist Church
38. Silksworth Methodist Church
39. Blaydon Methodist Church
40. Sunniside Methodist Church
41. Greenside Methodist Church
42. Victoria Road Methodist Church
43. Chopwell Methodist Church
44. Dunston Hill Methodist Church
45. Crawcrook Methodist Church
46. Clara Vale Methodist Church
47. Earsdon Methodist Church
48. Bradley Cottages Methodist Church
24
49. West Pelton Methodist Church
50. Claedon Methodist Church
51. Redhouse Methodist Church
52. Cullercoats Fishermen’s Mission
53. Great Lumley Methodist Church
54. Heddon-on-the-Wall Methodist Church
55. St Cuthburt’s Church
56. Westerhope Methodist Church
57. Dislton Road Methodist Church
58. Doxford Place Methodist Church
59. East Rainton Methodist Church
60. Christian Bank Methodist Church
61. Seaham Methodist Church
62. Humbledon Methodist Church
63. Prudhoe Methodist Church
64. Ebenezer Methodist Church
65. St John’s Methodist Church, Whitley Bay
66. Chester-le-Street Methodist Church
67. Birtley Methodist Church
68. Wark Presbyterian Church
69. Methodist and United Reforemed Church, Bellingham
70. St John’s Fence Houses Methodist Church
71. St John’s Methodist Church, Sunderland
72. Acomb Methodist Church
73. Sunniside
74. West Hatton Methodist Church
75. Pelton Methodist Church
76. Dipton Methodist Church
77. Ewesley Road Methodist Church
78. Langley-on-Tyne Methodist Church
79. South Moor Methodist Church
80. Morpeth Methodist Church
81. White-le-Head Methodist Church
82. Perkinsville Methodist Church
83. Delves Lane Methodist Church
84. Middle Herrington Methodist Church
85. Walbottle Methodist Church
86. Cowpen Methodist Church
87. Wylam Methodist Church
88. Stocksfield Methodist Church
89. Ebchester Methodist Church
90. High Southwick Methodist Church
91. Lanchester Methodist Church
92. Kyo Laws Methodist Church
93. Mickley Mount Pleasant Methodist Church
94. Medonmsley Methodist Church
95. Blackhill Methodist Church
96. The Grove Methodist Church
97. Blyth Central Methodist Church
98. Stamfordham Uniting Church
25
99. Welcome Methodist Church
100. Hedworth Lane Methodist Church
101. Leadgate Mthodist Church
102. East Stanley Methodist Church
103. Halton-lea-Gate Methodist Church
104. Houghton-le-spring Methodist Church
105. St Andrew’s Methodist and United Reformed Church
106. Heaton Methodist Church
107. Brunswick Methodist Church
108. West Moor Methodist Church
109. The Priory Church, Lancaster
110. Benwell & Walbottle Cricket Club
111. Haverigg Cricket Club
112. Appleton Cricket Club
113. Trimpell Sports and Social Club
114. Milnthorpe Cricket Club
115. Grampound Road Cricket Club
116. Truro Cricket Club
117. Warrington Sports Club
118. Barnton Cricket Club
119. Camborne Cricket Club
120. Long Melford Cricket Club
121. Hartford Cricket Club
122. Eaton Socon Cricket Club
123. Newton Hill Cricket Club
124. Stanstead Crcket Club
125. Witham Hockey Club
126. Witham Cricket Club
127. Witham Pavilion Club
128. Christian Malford Cricket Club
129. Ilkley Cricket Club
130. Airedale and Wharfedale Cricket Development Group
131. Galgate Cricket Club
132. Bishop’s Stortford Cricket Club
133. Penrith Rugby Union Football Club
134. The Spencer Club
135. 17th & 20th Whitley Bay Scout Groups
136. Neroche Village Hall
137. Pitney Village Hall
138. Kirklevington & Castlelevington Memorial Hall
139. Stanwix Rural Parish council
140. Dalston Parish Council
141. Carlisle Parish Councils Association
142. Wetheral Parish Council
143. Federation of City Farms and Community Gardens (Scotland)
144. Scout’s Association
145. Community Council for Somerset
146. Volunteer Cornwall
147. Community Sector Law Monitoring Group
148. Action for Communities in Rural England
26
149.
150.
151.
152.
153.
154.
155.
156.
157.
158.
159.
160.
161.
162.
163.
164.
165.
166.
167.
168.
169.
170.
171.
172.
173.
Consumer Council for Water
British Rowing
Royal Yachting Association
Churches’ Legislation Advisory Service
Rugby Football Union
British Rowing
Independent Methodist Churches
Central Council of Physical Recreation
Association of English Cathedrals
Lawn Tennis Association
British Waterways
England and Wales Cricket Board
Ofwat
United Utilities
Northumbrian Water
Severn Trent Water
Southern Water
South West Water
Thames Water
Wessex Water
Yorkshire Water
Individual on behalf of CLAS
Individual on behalf of CLAS
Individual on behalf of CLAS
Individual on behalf of Haverigg Cricket Club
27
Annex B: Legal basis
Section 43 of the Flood and Water Management Act 2010 enables water and
sewerage undertakers to operate concessionary schemes for community
groups for surface water drainage charges.
Section 43(1) allows for these schemes to be brought forward as part of an
undertakers charges scheme under Section 143 of the Water Industry Act
1991. Section 43(2) allows undertakers to decide whether to bring forward a
concessionary scheme, to decide which community groups to include and
what constitutes a community groups, what reduction in charges to allow, and
for different reductions to be granted to different classes of community group.
Section 43(3) provides that the method by which reductions can be applied is
by charging community groups by a lower band than one that correlates with
the actual site area of its premises but prohibits charges under a
concessionary scheme from being reduced to nothing. Section 43(4) provides
a non-exhaustive list of what can count as a community group in terms of
benefitting the local community. Section 43(5) requires the Water Services
Regulation Authority (Ofwat) and undertakers to have regard to any guidance
issued by the Minister around the need for concessionary schemes, which
community groups should benefit and what reductions in charges to allow.
Section 43(6) defines the Minister for the purposes of this Section as being
the Secretary of State for an undertaker whose area is wholly or mainly in
England and Welsh Ministers for an undertaker whose area is wholly or
mainly in Wales.
28
Annex C: Groups granted exemptions and reliefs from local
non-domestic rating
Exemptions from local non-domestic rating are, in the main, set down in
Schedule 5 Local Government Finance Act 1988.
Note, “Exempt” for the purposes of the 1988 Act means exempt from local
non-domestic rating (the Act does not cover water rates or charges).
Exemption does not imply nil value, although some exempt properties may
have nil value. There would, in many cases, be no need to exempt a class of
property if it had no value anyway. Doing so, might however have
administrative advantages.
Exemptions have come about for various,
sometimes historic reasons, e.g. the present and historic role of the Church
for places of public religious worship.
Domestic property ie dwellings, are not subject to rates but to Council Tax.
Council Tax has its own provisions for exemptions.
Schedule 5 Local Government Finance Act 1988 non-domestic rating
exemptions are:
i. Agricultural premises
(a)
(b)
agricultural land;
agricultural buildings;
ii Fish farms
.
iii Places of religious worship
(a) a place of public religious worship
(b) a church hall, chapel hall or similar building
iv
Certain property of Trinity House
(a)
(b)
(c)
v
a lighthouse;
a buoy;
a beacon;
Sewers
vi Certain property of drainage authorities
vii Parks
viii Certain property used for the disabled
29
ix Air-raid protection works
x Swinging moorings
xi Road crossings over watercourses etc
xii Property used for road user charging schemes
xiii Property in enterprise zones
xiv Visiting forces etc
Additionally, under other statutes, common law and rating law, there are the
following exemptions and immunities:
(a)
(b)
(c)
(d)
(e)
(f)
Public highways
Foreign sovereigns and sovereign states
Diplomats
Consular premises
Some International Organisations
Miscellaneous others provided for by specific acts
Relief (where a reduction in liability is given) can be either mandatory or
discretionary and is available to:
(a)
(b)
(c)
(d)
Charities
Registered sports clubs
Small businesses
Rural shops, public houses and filling stations
Generally, rates are now liable on empty properties although there are some
exemptions.
30
Annex D: Estimates of likely impacts in a concessionary
scheme
When it switched to site area charging for SWD in 2002/03, Severn Trent
Water introduced a concessionary scheme for community premises in its
operating area.
This exempted churches and other places of worship on the grounds that the
majority are zero rated and consequently had never paid SWD charges and
capped the charge payable by community premises at band 3 of the
company’s site area tariff (i.e. it assumed a notional chargeable area of
between 100m2 and 199m2). This capped the charge payable by community
premises in Severn Trent’s operating area at £99.36 for the 2009/10 financial
year.
Community premises in the Severn Trent concessionary scheme covers
properties owned by scout and guide associations, village and community
halls and similar types of community groups. Nursing and care homes were
also placed in charging band 3. Severn Trent did not switch schools and
hospitals to site area charging with the result that they have continued to pay
according to rateable value.
Based on this concessionary scheme, the figures below provide an indicative
estimate of the impact on each domestic and non-domestic customers’ bills
from including the following community groups in a concessionary scheme:
-
Places of Worship
Care/Nursing Homes
Community Premises
Hospitals
per annum
Schools
annum
10 to 20 pence per annum
20 to 25 pence per annum
10 to 20 pence per annum
30 to 40 pence
£2.00 to £2.50 per
In total, Severn Trent’s concessionary scheme currently costs each customer
between £2.70 and £3.55 per annum; or 5 to 7 pence per week.
Severn Trent’s scheme does not include registered charities in its definition of
community premises (unless these benefit by virtue of being a community
premises that happen to be registered charity such as some community halls
and scout huts).
Severn Trent Water also estimated the one-off cost of transferring to this
charges system, i.e. obtaining the relevant site area details, informing the
customers, dealing with queries etc are forecast to be in the region of £1
million. Undertakers will want to minimise the administrative costs of
operating any concessionary scheme.
31
As the statutory consumer body for water customers, the Consumer Council
for Water has carried out research on customers’ willingness to crosssubsidise other customers with affordability concerns. Its 2006/7 4 deliberative
research project found that customers consistently opposed extension of low
income groups with few exceptions.
Follow up research carried out in 2007 5 found that 69% thought it was
reasonable that households currently pay about an extra £1 per year in their
bill to provide assistance under the WaterSure scheme. Respondents
identified that other groups of people that could be helped through social
tariffs were pensioners (68%), disabled (58%) and low income households
(34%).
When respondents were asked if they would find it acceptable to pay more
than the current £1, in order to extend help to these other groups through a
social tariff, the proportion of participants responding positively declined as the
amount of the proposed charge increased. Only 39% would support it
increasing to £2 (ie an additional £1) and 19% would support it increasing to
£5 with support declining to 3% for more than £10.
Whilst WaterSure is different to a concessionary scheme for community
groups from SWD charges, the principle of customers being unwilling to
provide excessive cross-subsidy can be expected to still hold true.
4
5
http://www.ccwater.org.uk/upload/pdf/CWRD_907_full_version.pdf
http://www.ccwater.org.uk/upload/pdf/Charging_Final_Report.pdf 32
33