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Water concessions for charities 'should be absorbed by other water customers' 4

Finance | Tania Mason | 14 Jul 2010

The government has advised water companies to pass the cost of subsidising community groups’ water drainage charges on to all their other customers, including low-income households.

In its draft guidance on how water companies should apply discounts to the drainage bills of community organisations, as required by the Flood and Water Management Act 2010, Defra says it should be up to individual companies to devise their own concession schemes according to local needs and views.

In the consultation document published this week, the government stated that introducing unaffordable surface water drainage 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.”

However, the government prefers water companies to recoup the costs of implementing any subsidy from all of the rest of their customers, including low-income households, rather than just from other “non-household” customers.

It said: “The government recognises that some household customers struggle with their water and sewerage bills. However, granting a concession to community groups 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.”

Companies to design own schemes

The guidance tells water companies to carry out an impact assessment of the new charging system and make this available to customers. Companies that wish to introduce a concession scheme for community groups must consult their customers on whether one is needed and how it might operate. But “it is for individual companies to decide what type of concession to bring forward”.

It suggests some models, such as placing community organisations in a concessionary band that would cap their charge or giving such organisations a percentage discount off their bill. It does not support means-testing of customers, nor zero charges for anyone.

And it outlines the criteria companies should use when deciding who should benefit from any concession, so that the following groups should be included: churches, Scout and Guide halls, community sports clubs, and village halls.

However, not all charities should automatically be included, as not all charities face huge increases in their bills. Companies should use their impact assessments and consultation responses to decide which should benefit.

It goes on to state that there will be some community groups that are not charities but which meet the criteria, such as social clubs, hospitals, schools, nursing homes and care homes.  But, “the government does not believe that groups such as these should be included in perpetuity in any concessionary scheme”, because “such organisations typically have relatively high water and sewerage bills and much higher operating costs…they are therefore more likely to be able to absorb the cost of the charges or to pass them on.”

Charity reactions

Simon Carter, spokesman for the Scouts who, along with church groups led the campaign against higher charges for the sector, said the Scouts would consult its 9,000 member groups before responding to Defra's consultation.

One model the Scouts will ask members for views on is a billing system based on the turnover of the charity, Carter said.  

Martin Dales, spokesman for the Church of England, broadly welcomed the draft guidance but was concerned that the government's criteria appeared to exclude schools.  "That will need a bit of looking at," he said.

He was also slightly disappointed that concession schemes wouldn't be mandatory, but added that the government's language in the document made it clear to the companies how they are expected to behave.

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