Section 37 — Reduced charges

Water Industry (Scotland) Bill: Stage 3 – in the Scottish Parliament at 11:00 am on 14th February 2002.

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Photo of Murray Tosh Murray Tosh Conservative 11:00 am, 14th February 2002

Amendment 27 is grouped with amendments 1, 90 and 102. We have slipped slightly behind our timetable, so I ask speakers to be as brief as possible.

Photo of Allan Wilson Allan Wilson Labour

Section 37 has generated considerable interest. Yesterday, the Executive announced the details of the water charges exemption scheme for smaller voluntary organisations. The result is that a full exemption from charges will be provided for four years for all premises that are currently eligible for charge relief, provided that the organisation that is responsible for paying the charges has an income of less than £50,000 a year.

Scottish Water will provide the exemptions in regulations that will be issued by ministers under section 37. At present, the bill is drafted in such a way that the regulations could provide only for reductions and not for exemptions. As the intention is that organisations could be totally exempted from charges rather than simply have their charges reduced, amendment 27 is necessary to give ministers sufficient statutory backing.

The purpose behind the Executive's scheme is to ensure that the continued phased withdrawal of reliefs does not affect those groups and bodies that provide local service with little or no support from central or local government. From the outset, that objective has been shared by the Transport and the Environment Committee, which concluded in its stage 1 report that the current reliefs arrangement is

"too broad-brush and not sustainable".

My concern with amendments 1, 90 and 102 is that each takes as a starting point the definition of a Scottish charity that appears in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. As a result, the amendments would extend reliefs well beyond those premises that currently receive them. The amendments would extend the reliefs to something like 30,000 bodies and cause a consequential cost increase of about £27 million. The cost could be more if other organisations were to take advantage of the new approach by establishing themselves or parts of their organisations as charities. For example, local authority swimming pools or various university premises might attempt such a move.

Obviously, that would go in the opposite direction from that which was advocated by the Transport and the Environment Committee. In the process, a substantial and open-ended burden would be placed on Scottish Water and its customers, who are ultimately the people who must meet the costs of relief. That extra cost on customers should be seen in the context of our previous debate on Mr Sheridan's amendments 97 and 98.

That situation simply would not be sustainable. Indeed, it would not be fair, as costs would be passed on to customers, who would effectively face a 5 per cent surcharge or compulsory charitable donation. For people on low incomes of £10,000 or less per annum or for people on fixed incomes, that would be neither equitable nor fair.

Photo of Allan Wilson Allan Wilson Labour

I am sorry. I have to be brief, but I am happy to come back and answer any points later.

There was a full and useful debate at stage 2, and we have had constructive discussions with the Scottish Council for Voluntary Organisations and representatives of churches and youth organisations. I met representatives from those groups and we announced our proposals yesterday. Our proposals, which we have drawn up after consultation with those organisations, are good news for local halls, churches and other organisations and premises that will receive relief as they do at present. Most, if not all, of those organisations will pay no charges at all for four years and will be eligible for a further four-year exemption if they still satisfy the scheme's criteria at that point.

In addition to that significant scheme, there will be a hardship fund for the next two years, which will help those groups that face particular hardship as a result of the withdrawal of relief, even though they exceed the income threshold.

I believe that targeting help where it is needed is the right approach. It contrasts with the approaches underpinning the amendments that have been lodged by Robin Harper, Richard Lochhead and Dennis Canavan, which I believe are unsustainable and unfair. I therefore recommend that Parliament reject amendments 1, 90 and 102.

I move amendment 27.

Photo of Robin Harper Robin Harper Green

At stage 2, Jackie Baillie lodged an amendment that was identical to amendment 1, except that amendment 1 reduces the amount of the water charges that charities would have to pay from 30 to 20 per cent. That would make very little difference to the people paying, but a great deal of difference to the charities. I thank Jackie Baillie for providing the basis for amendment 1. As she said at stage 2, the purpose of the amendment is quite clear. It would provide for all Scottish charities a relief scheme that is based on metered water supplies.

I understand that Scottish Water will move to metering all non-domestic supplies by the end of March 2003. Subsection (1) of amendment 1 proposes the free installation of meters for Scottish charities and paragraphs (a) and (b) ensure that meters are installed by 31 March 2003 or as soon as reasonably practicable. The target is challenging but, as Jackie Baillie said, many voluntary organisations are already metered, and the aim is achievable.

Subsection (2) of amendment 1 says that

"Scottish Water must provide detailed advice on ... minimising water consumption".

Water conservation is vital, even in a wet country such as Scotland, not because water is in short supply, but because supplying it costs money and uses resources. I direct members' attention to article 9 of the forthcoming EU water framework directive, on water pricing policies. That article will insist on efficiency in water use, so we might as well start moving with the spirit of the directive now.

Subsection (3) is the nub of amendment 1. It gives charities 80 per cent relief and largely maintains the status quo. That is what the Executive proposes to do, but only for the next four to eight years.

Subsection (4) refers to local authorities because I understand—again, from what Jackie Baillie said—that some local authorities provide assistance with water provision on a one-off basis for agricultural shows and village fetes, for example.

Subsection (5) determines that the amendment covers all Scottish charities. The Executive's suggested income threshold of £50,000 a year is not sufficient. Organisations such as the National Trust for Scotland, the Scottish Wildlife Trust and larger social charities will not be covered. Charities that are high-volume water users, such as hospices, care homes and disabled day care centres, will not ultimately be helped by the Executive's scheme. The Executive's argument that local and central Government should reflect the withdrawal of reliefs by increasing grants to charities is unrealistic and is passing the buck, as there is no guarantee that such compensation would be paid in the long term.

The current cost of charitable relief is estimated at £15 million. The Executive has just revealed that it reckons that my proposal would cost £27 million. In reality, that still means only a few pounds on people's water bills. Has anybody in this chamber yet received one letter from any constituent complaining about the amount of subsidy that they are already paying to charities? I am willing to bet that the answer to that question would be no.

Charities will have to pay large amounts of money out of badly needed funds if the bill goes through without amendment 1. I understand that Capability Scotland is set to lose £90,000 and that the National Trust for Scotland will lose more than £100,000. That is the equivalent of five full-time posts or 14 seasonal posts. Let us not take those funds away from charities. Amendment 1 would maintain the status quo and provide a guarantee for charities in the future.

Photo of Richard Lochhead Richard Lochhead Scottish National Party 11:15 am, 14th February 2002

Amendment 90 is the SNP's second and final attempt to amend the bill in this way. Our case for retaining the on-going commitment to give 80 per cent water rates relief to charities is simple. The whole point of keeping the water industry in public ownership is to help us to deliver social justice in Scotland. That is why we have to include in the bill the commitment to help the voluntary and charitable sector. We are talking not about a new arrangement, but about a continuance of the existing arrangements. We are not talking about new costs.

Executive ministers have made a mess of the issue over the past two or three years. A number of players have acted out various shambolic scenes in the comedy of errors that we have witnessed over that period. First there was Sarah Boyack, then Sam Galbraith, then Rhona Brankin, then Allan Wilson, and today Ross Finnie.

The SNP's campaign has been vindicated, because we have come quite a long way in two years. When the campaign started more than two years ago, the voluntary sector's pleas to the Executive about the proposed removal of all water rates relief were totally ignored. After that, the Government introduced a delay, but that still did not sort out the problem. The next minister introduced another delay in the phasing of the withdrawals. Then there was a leaked memo from the Executive saying that it would exempt organisations that had an annual income of less than £5,000. Then, on the eve of stage 2, the position changed again so that organisations with an income of less than £10,000 would be exempt. Last night, at the 11th hour, just before the stage 3 debate, the Executive upped that threshold to £50,000 and offered a hardship fund.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

As I said, we welcome all five of the concessions that have been made so far as a result of the outcry from the voluntary sector in Scotland and from the SNP and other parties in this Parliament.

I refer the minister to yesterday's press release from the Scottish Council for Voluntary Organisations, which was headed "Executive running in right direction over water". Well, that is quite right. The Executive is running in the right direction. The difficulty is that it has not arrived. If amendment 90 is agreed to today, we will have arrived.

The last thing that our voluntary sector and charitable organisations need is for water rates reliefs to be removed at a time when the basic rate of water charges has increased substantially over recent years. Jackie Baillie told the committee at stage 2 that charities would lose £15 million because of that decision. If we introduced water meters, that would save £6 million, leaving a bill of £9 million. The minister's announcement yesterday offers £500,000 of support. That would leave a bill of £8.5 million for the charitable sector, the bulk of which would be paid for by organisations with an income of more than £50,000, which are not exempt. Those organisations will include hospices, care homes and nursing homes.

It is imperative that this Parliament sends out the right message to the voluntary sector in Scotland today. Those organisations devote their time to helping the more vulnerable members of our society. Surely, for the first time in centuries, our new Scottish Parliament should not remove that principle from the bill today, but should continue to give 80 per cent water rates relief to charities. I ask each and every MSP in the chamber to look at their mailbags over recent months and years and to support amendment 90, so that we can continue to support the organisations that support the more vulnerable people in our society.

Photo of Dennis Canavan Dennis Canavan Independent

I will concentrate my remarks on amendment 102, in my name. The Executive seems to have accepted the principle of reduced charges for certain categories of consumer. However, the indications so far are that the Executive's proposals are inadequate. As I understand it, the Executive proposes exemptions for organisations that currently qualify for relief and that have an annual income of less than £50,000 in respect of the premises that the organisation occupies. I welcome the raising of the threshold, which was initially £5,000, was increased to £10,000 and is now £50,000—it is beginning to look like an auction. However, the Executive is not going far enough.

The Executive proposals would rule out relief for many deserving organisations that have an annual income of more than £50,000, including organisations that provide a valuable service to the community, such as churches, hospices and miners welfare organisations. Those organisations would find it more difficult to provide that valuable service if relief from water charges was withdrawn.

Take Strathcarron hospice in my constituency, which provides an excellent service to people with terminal illnesses and their families. The hospice has an annual turnover of about £2.8 million. About half the hospice's revenue comes from voluntary subscription. Relief from water charges currently amounts to about £9,000 per annum.

Under the Executive proposals, the hospice would lose that money and would have to find another £9,000 per annum from voluntary subscription in order to maintain its excellent standards of patient care.

Under amendment 102, charities such as that hospice, and other approved organisations, would be eligible for at least 80 per cent and up to 100 per cent exemption from water charges. The criticism has been that if we give relief to all charities there might be some that are undeserving cases. It has been suggested that some of the biggest beneficiaries of such a proposal would be private fee-paying schools. Amendment 102 attempts to address that criticism by excluding such schools.

Photo of Murray Tosh Murray Tosh Conservative

In view of the time scale it would not be reasonable for Mr Canavan to take an intervention. I would like Mr Canavan to conclude as quickly as possible.

Photo of Dennis Canavan Dennis Canavan Independent

Any deserving organisations might be considered under section 37 as it is drafted. I ask the Parliament to support amendment 102, which will enable charities such as hospices and churches to continue their valuable service to the community.

Photo of Murray Tosh Murray Tosh Conservative

I will call as many members as I can to speak, but I would be obliged if members could limit their speeches to two minutes.

Photo of Des McNulty Des McNulty Labour

We had a lengthy debate in the Transport and the Environment Committee about the balance between social responsibility and the burden that it is legitimate to place on charge payers. The committee's view was that we needed a more targeted scheme than that currently in place. We said that such a scheme should concentrate on voluntary organisations that had premises that were not supported from local or central Government sources; we considered premises such as scout huts and church halls to be particularly vulnerable to the sudden imposition of charges. I am delighted that the minister has listened to the committee and has proposed a very good scheme, which is probably more generous than the scheme that the committee initially envisaged. When we consider the problems and issues involved, it seems that the minister has come up with a scheme that will satisfy the vast range of local organisations—those are the people in whom we were particularly interested.

Richard Lochhead makes a point about supporting social justice. That is important, but it is also important that we support social justice in the right way. The primary mechanism for that should be a social justice budget delivered by central Government, rather than relief from water charges.

At an earlier stage—in the committee report and at stage 1—Robin Harper signed up to the principle of a more targeted scheme. He has not made clear why he is now taking a different view in amendment 1. Richard Lochhead does not understand his own amendment. Amendment 90 does not maintain the status quo but would make a significant extension to the current scheme by including all charities. Dennis Canavan made a point about hospices. My understanding is that the minister gave a clear commitment that the position of hospices would be protected in relation to the extension of charges scheme. That is something that I have campaigned for strongly. The biggest hospice in the UK is in my constituency and I am delighted that the minister has responded positively to our suggestions.

Photo of Fiona McLeod Fiona McLeod Scottish National Party

I want to get to the fundamentals. Every member must see this as an example of our commitment to Scotland's charities. While we wait for the Executive to introduce charity legislation, we need the Water Industry (Scotland) Bill to show that we support Scotland's charities by giving them 80 per cent relief from water charges. If we vote against including such a provision in the bill, how can we say that we have a compact with the voluntary sector to deliver vital services to some of the most vulnerable members of our society?

There are problems with the latest deal. The minister asked whether we welcome the deal. I have pushed and pushed on the issue and the Executive has moved and moved, so of course we welcome it. However, the problem is that it takes us back to special pleading. Two members have talked about hospices. Because of the special pleading on hospices, the Executive said at stage 2 that Malcolm Chisholm would ensure that the money that hospices receive from the Government covered water charges. Do we have to keep making special pleas for different charities? The new hardship fund is a case of more special pleading, making more special cases and having charities tied up in bureaucracy to plead with the Executive to pay their water bills. It is not appropriate and it is not right that we ask charities to do that.

Amendment 1 is not ideal, although we will support it because it is better than nothing. However, the issue is not conservation and the amendment will affect disproportionately charities that need to use water to deliver their services, such as hospices. We cannot support amendment 102 because fee-paying schools are not just private schools. The seven grant-maintained schools—Donaldson's College, the Craighalbert Centre, the Royal Blind School and so on—are charities that provide a national service. We cannot put them under threat.

Photo of Murray Tosh Murray Tosh Conservative

No. The member cannot take an intervention at this point.

Photo of Fiona McLeod Fiona McLeod Scottish National Party

I urge members to vote for amendment 90. That provision must be included in the bill to prove to voluntary and charitable organisations that the Parliament is serious in supporting their work and will not tax them in it.

Photo of Jackie Baillie Jackie Baillie Labour

I am extremely disappointed by some of the speeches that have been made. At stage 1, Fiona McLeod made none of the points that she just made. However, I am glad that she listens and learns. As Robin Harper and Richard Lochhead are both so keen to agree with and quote my opinion, perhaps they will support what I am about to say.

I have no doubt that section 37 was the most contentious section at stage 2—particularly for voluntary organisations and charities that currently enjoy relief from water charges. Timing is everything. In April, many voluntary organisations will, for the first time, lose up to 40 per cent relief. It is therefore essential that we move quickly. That will place a significant burden on many voluntary organisations that have few reserves, little flexibility and limited funding streams. That is why I lodged an amendment at stage 2, which was supported by Maureen Macmillan and several other Labour MSPs. The Executive—helpfully—agreed to reflect further on the amendment's proposal in order to ensure that there is targeted relief for voluntary organisations.

I welcome and endorse the Executive's proposal, which is based not on the size of an organisation—I point out to Fiona McLeod that the Water Industry (Scotland) Bill is not the place to define charities—but on premises. The proposal is based not on a turnover of £5,000, which was the starting point, but on premises' income of up to £50,000. I particularly welcome the hardship fund of £1 million for organisations that might initially encounter difficulty if they do not meet the eligibility criteria. I also note that the minister will consult the voluntary sector on the detail of the scheme. That is also welcome because we will produce better policies and outcomes if we involve the voluntary sector early.

I ask for the minister's response to four very quick points. First, I seek confirmation that the income threshold for premises relates to income generated by those premises and so excludes staff costs for running the services. Secondly, does the relief cover consumption and standing charges? Thirdly, will free water metering continue to be available, together with advice and practical support on water conservation? Last, will the minister reflect further on the date of eligibility for the small number of voluntary organisations that have moved premises and lost relief as a consequence?

I conclude by emphasising my support and, I hope, the chamber's support for the Executive's proposals. I know that those proposals will be welcomed by community organisations in my area. They are a positive example of a committee and the Executive working together and I thank the minister for listening.

Photo of John Scott John Scott Conservative 11:30 am, 14th February 2002

I supported Richard Lochhead's stage 2 amendment and I intend to support amendment 90 today. As I said at stage 2, the targeted relief that is proposed by the Executive misses the target. Large charities are every bit as important to Scotland as small ones and for the Government to suggest otherwise is simply dishonest. The Conservative party's campaign on behalf of such charities has never faltered.

In particular, charities that use high volumes of water must have allowances made for their needs. I refer again to the Ayrshire Hospice, Malcolm Sargeant Cancer Fund for Children and Hansel Village in my constituency as three charities that spring immediately to mind. Their costs will rocket if the reliefs are discontinued.

The Executive's proposals have a Dickensian feel about them, with Ross Finnie playing the unlikely role of Scrooge and Richard Lochhead and I as rather well fed stand-ins for Oliver Twist. However, there is an argument that some charities are more in need of support than others. That is self-evident. Until the Executive makes proposals that result from the McFadden report—which attempts to sort out the more deserving from the less deserving—we have a duty to support all charities equally. Until the Executive makes better proposals that my party is happy to examine on their merits, we must not throw the baby out with the bath water and, in so doing, damage our most valuable charities.

It is essential that our major charities also enjoy reliefs. Although I welcome the new £50,000 threshold, it is important that we agree today that our larger charities should benefit and continue to benefit from the 80 per cent reliefs that they currently enjoy. I urge the chamber to consider that.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

I would like to bring the debate back within the parameters of the real world. What will be the amendments' end result?

When the three water authorities were set up, charitable reliefs were to be withdrawn because it was deemed to be appropriate that water-charge payers support charities that should be supported by the public purse.

Photo of Nora Radcliffe Nora Radcliffe Liberal Democrat

I do not have enough time to take interventions and Richard Lochhead has had his turn.

The Government intervened so that the burden did not fall immediately on charities. We are now setting up a new body and removing charitable relief from an area in which such relief is inappropriate and returning it to an area in which public support for charities is appropriate.

The debate is not about whether charitable effort should be supported—that is a given. The argument is about the sensible way to support charities and whether it is sensible to make all water-charge payers, some of whom are the vulnerable people we have been talking about, pick up the social bill for charitable effort that the public purse should be paying.

We say that we should support charities, but if we agree to such open-ended and generous amendments on charitable relief, it is not we who are being generous, but we who are being generous on behalf of water-charge payers who—as has been said—include people on low incomes. Members should bear that in mind because that is the real debate.

The Transport and the Environment Committee debated the issue. We zeroed in on a group of charities that we thought would be liable to be disadvantaged by the removal of reliefs. We thought that those charities should get more time to adjust to the withdrawal of charitable reliefs. We asked the Executive to come back with a targeted scheme, which it did, although there were criticisms of it. The Executive went to the SCVO and the voluntary sector and then made the scheme more generous. It has added a limited hardship fund to pick up unforeseen special cases. That is laudable and I welcome it.

We must bear in mind the end result, which should be that charitable relief does not sit with water-charge payers, but with the public purse. We are not talking about whether to support voluntary effort, but about the best and most appropriate way to do that.

Photo of Allan Wilson Allan Wilson Labour

I will be as brief as I can.

The Executive's priority is clearly the delivery of social justice. One of the anomalies of the bill has been that the debate has concentrated on water relief when the aims and objectives of the bill are to establish a single company to oversee the water industry. The bill is not ideal for the purpose of discussing social justice.

Photo of Bristow Muldoon Bristow Muldoon Labour

Does the minister acknowledge that during the stage 1 debate at the Transport and the Environment Committee, Robin Harper, Fiona McLeod, Adam Ingram and John Scott all supported proposals that are more or less the same as those that are now being proposed by the Executive?

Photo of Allan Wilson Allan Wilson Labour

I acknowledge what Bristow Muldoon said. I have noticed certain inconsistencies in the SNP's approach to the matter.

I clarify the position for the benefit of the nationalists, who do not seem to understand what is being proposed. Scotland's 13 hospices will receive separate treatment outside the relief scheme. Water charges are not a significant part of those hospices' overall running costs. I have calculated that the charges constitute less than half of 1 per cent of their costs. Withdrawal will be taken into account along with the increased health board funding that was announced by my colleagues in the health department.

Photo of Dennis Canavan Dennis Canavan Independent

Is the minister saying that the Minister for Health and Community Care will give to health boards a ring-fenced additional amount of money for each hospice. For example, in the case of Strathcarron Hospice, will the Executive give an additional ring-fenced £9,000 per annum to Forth Valley NHS Board to make up for the money that it is losing through the loss of water relief?

Photo of Allan Wilson Allan Wilson Labour

Lest there be any doubt, the answer to that question is yes. Is that clear enough for the nationalists among us?

Photo of Allan Wilson Allan Wilson Labour

With respect, I must move on.

A number of important questions were asked by my colleagues. To the questions on income that is generated and free meters, the answers are yes—the expected date of implementation applies to all those currently being charged.

I believe that the scheme is workable and that it will benefit more than 90 per cent of the groups that were targeted by the Transport and the Environment Committee as being deserving of the charitable relief that we now intend to provide. I commend the scheme to the Parliament.

Photo of Murray Tosh Murray Tosh Conservative

The question is, that amendment 27 be agreed to. Are we agreed?

Members:

No.

Division number 14

For: Adam, Brian, Aitken, Bill, Alexander, Ms Wendy, Baillie, Jackie, Barrie, Scott, Boyack, Sarah, Brankin, Rhona, Brown, Robert, Butler, Bill, Campbell, Colin, Canavan, Dennis, Chisholm, Malcolm, Craigie, Cathie, Crawford, Bruce, Cunningham, Roseanna, Curran, Ms Margaret, Davidson, Mr David, Douglas-Hamilton, Lord James, Elder, Dorothy-Grace, Ewing, Dr Winnie, Ewing, Fergus, Ewing, Mrs Margaret, Fabiani, Linda, Ferguson, Patricia, Fergusson, Alex, Finnie, Ross, Fitzpatrick, Brian, Fraser, Murdo, Gallie, Phil, Gibson, Mr Kenneth, Gillon, Karen, Godman, Trish, Goldie, Miss Annabel, Gorrie, Donald, Grant, Rhoda, Gray, Iain, Hamilton, Mr Duncan, Harding, Mr Keith, Henry, Hugh, Home Robertson, Mr John, Hughes, Janis, Hyslop, Fiona, Ingram, Mr Adam, Jackson, Dr Sylvia, Jackson, Gordon, Jamieson, Cathy, Jamieson, Margaret, Johnstone, Alex, Kerr, Mr Andy, Lamont, Johann, Livingstone, Marilyn, Lochhead, Richard, Lyon, George, MacAskill, Mr Kenny, Macdonald, Lewis, MacDonald, Ms Margo, Macintosh, Mr Kenneth, MacKay, Angus, Maclean, Kate, Macmillan, Maureen, Martin, Paul, Marwick, Tricia, Matheson, Michael, McAllion, Mr John, McAveety, Mr Frank, McCabe, Mr Tom, McGrigor, Mr Jamie, McIntosh, Mrs Lyndsay, McLeish, Henry, McLeod, Fiona, McLetchie, David, McMahon, Mr Michael, McNeil, Mr Duncan, McNeill, Pauline, McNulty, Des, Monteith, Mr Brian, Morgan, Alasdair, Morrison, Mr Alasdair, Muldoon, Bristow, Mulligan, Mrs Mary, Mundell, David, Munro, John Farquhar, Murray, Dr Elaine, Neil, Alex, Oldfather, Irene, Paterson, Mr Gil, Peacock, Peter, Peattie, Cathy, Quinan, Mr Lloyd, Radcliffe, Nora, Raffan, Mr Keith, Robison, Shona, Rumbles, Mr Mike, Russell, Michael, Scanlon, Mary, Scott, John, Scott, Tavish, Simpson, Dr Richard, Smith, Elaine, Smith, Iain, Stephen, Nicol, Stevenson, Stewart, Stone, Mr Jamie, Sturgeon, Nicola, Swinney, Mr John, Thomson, Elaine, Ullrich, Kay, Wallace, Ben, Wallace, Mr Jim, Watson, Mike, Welsh, Mr Andrew, Whitefield, Karen, Wilson, Allan, Wilson, Andrew
Abstentions: Harper, Robin, Sheridan, Tommy

Photo of Murray Tosh Murray Tosh Conservative

The result of the division is: For 114, Against 0, Abstentions 2.

Amendment 27 agreed to.