Environment and Rural Development Committee, 22 Sep 2004

Meeting date: Wednesday, September 22, 2004

Official Report 215KB pdf

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Water Services etc (Scotland) Bill: Stage 1

Our third panel of witnesses consists of three representatives from the Convention of Scottish Local Authorities. They are Councillor Alison Hay from Argyll and Bute Council, Councillor Alan Kenney from Fife Council and James Thomson, who is finance policy manager at COSLA.

We were keen to have the witnesses before us this morning because part 3 of the bill contains provisions for preventing and clearing up water discharges from abandoned mines. I am particularly pleased that Councillor Kenney is able to be with us this morning, as he represents a local authority with a coal mining interest. That is an element of the bill that we have not thus far explored with other witnesses, so we are keen to tackle it this morning.

As with the other witnesses who have come before us, we will not take opening statements from the witnesses, as we already have COSLA's written statement, for which we thank you.

We shall kick off with mining, because we have not dealt with it before. I know that Mark Ruskell is interested in the subject; he has a regional interest in it. After him, I shall invite questions from other members. Once we have explored mining, we shall move on to some of the wider policy issues that other witnesses have flagged up this morning.

Do you believe that part 3 sets out clearly enough the powers of the Coal Authority? In what way do you believe the bill might change the relationship that exists between the Coal Authority and the Scottish Environment Protection Agency?

Judging from practical experience in Fife—I am sure that local authorities in other parts of Scotland have had similar experiences—we seem to find ourselves in a grey area at present with regard to admission of liability. We have experienced that in practice in respect of ex-workings and the water table with instances of coal-mine water getting into water courses and affecting communities. It is difficult to ensure that we deal with such problems promptly. Until now, our experience has been that we have had to have considerable dialogue with the Coal Authority to get it to do the job with us without its admitting any liability. That is a concern for the future, but the Water Services etc (Scotland) Bill should give us an opportunity to address that.

Do you believe that the responsibilities are clear enough in the bill?

In many such cases, that is not found out until there is a legal challenge, is it?

Is that a no?

Or a maybe.

You are right to say that it is not until an act is implemented that we know precisely what its impact will be. Given your experience, are there specific areas about which you have concerns?

First, the Coal Authority does not have a base in Scotland—we deal with an authority that is based down in the midlands of England. When there is pollution from mines and the environment is affected, speed is of the essence, so we must ensure—whatever is done and whatever bill is passed—that we are not sidetracked by ifs, buts and maybes. We would like stronger wording in the bill to give clear guidance on how things will be handled and who will do what.

I suppose that that could be in the bill itself or in guidance, but we can seek reassurances from the minister on that point when we probe further.

I was reading through the Scottish Parliament information centre's briefing on some of the discussions on the issue that have taken place in England. There was some discussion about whether the provisions should be extended to other forms of mining, which I guess are more relevant to England than to Scotland. Do you have any opinions on that? Is coal mining the only issue in relation to which we should consider environmental liability for discharge of pollutants?

I believe that the legislation should, as has been done in England, cover all types of mineral extraction because pollution can come from any current or past mineral extraction. Scotland has no deep mines left, so any deep-mine water pollution that we deal with is historic. However, we still do quite a lot of mineral extraction—whether it is from hard stone or sand. Those extractions have a common need for water, whether as part of the dust-abrasion process or because the machinery uses water. The contamination of water courses should certainly be considered.

Do you have an example of where that has happened in Fife?

We work closely with SEPA, which carries out good monitoring. We do that more so now because many of our communities self-monitor. They normally make the first contact with the local authority or SEPA to say that something is wrong. It is not only coal mining that should be looked at, but all aspects of mineral extraction.

That is clear and helpful to the committee. If no one else has questions about mining or coal, I open up questions to cover wider issues with which we have been dealing.

I have a great big enormous question that other people will probably want to ask. How do you see the balance between social and commercial needs in supplying water and the matter of cross-subsidy between businesses and domestic customers? You mentioned in your submission affordability and the difficulty that people have in paying their bills and the difficulty that local authorities have in collecting payment. Will you start by teasing out the issues that you flagged up in your submission? I am sure that other members will want to ask supplementary questions.

That is a big question.

Perhaps you could start by speaking about affordability and what needs to be done to make water more affordable to households that cannot afford it at the moment.

That would take into account whether to allow people who are on very low incomes to have water rebates. Is that the sort of thing you are looking for?

Yes.

At the moment, there is rates rebate for single persons, for example. COSLA's view is that that should continue and that we should ensure that people who are on any benefits also receive some sort of water rebate. We have to examine how that would be managed.

Is that a significant issue? Do you find that people in different local authority areas cannot afford to pay their water bills?

That is all tied in with the collection side. At the moment, we just take in a bulk collection and we pay a certain amount to Scottish Water based on what we collect in rates, but that system takes no account of whether people can afford to pay. We end up having to chase people for water rates that they cannot afford to pay if they are on benefits. It is an unfair system; we need one that is much clearer and more understandable.

I am trying to find out the scale of the problem that we know exists.

We welcome the fact that affordability is the key focus; we can all hold to that. As Councillor Hay said, some system of relief should be brought in for people who have income problems. Such problems should be recognised in the council tax relief system for people receiving full or partial relief.

The consultation document on billing and collection quoted a Scottish Water figure of £18 million, which is a transfer and revenue figure, but that is a result of the difficulties that people who receive either full or partial relief from council tax have in paying their water charges. Obviously, that relief and those rebates are offered to people because of their low income and the difficulties that they have in paying. If they have to pay the full water charge, that is a significant amount for a low-income family or in a low-income person's budget. That is why COSLA is seeking full relief and a rebate relief rather than a stirring of the pot, which will mean reapportioning discounts to target the needy, as the "Paying for Water Services 2006-2010" consultation paper suggests. If the underlying key is affordability, we should seek to target all people who struggle in those areas.

I have a quick follow-up question in the light of the evidence that we received from the Scottish Consumer Council this morning. The Scottish Consumer Council came up with the idea that an indicator of water poverty would be a water charge that represents more than 3 per cent of a household's disposable income. What is COSLA's view on that? Has COSLA done any research on people's difficulties with paying water charges or on differential collection in respect of the council tax and water charges?

No, we have not investigated that side of things. On amounts and percentages, if people receive benefits, that is an indication that they are struggling and that the household's income is severely limited. Therefore, we should look with sympathy on whether such people should be expected to pay full water charges. I hope that the bill will address that problem.

Many people in the country still do not define the difference between the water charge and the council tax; indeed, they still believe that the water authority is part of their local authority. In my experience, and going by the number of phone calls that are made when people have a water problem, people still contact the local authority rather than Scottish Water: people still have the mentality that whatever is on the billing is part of their council tax.

I take it that you are not suggesting that the system should be changed so that there is separate billing.

No. We are simply suggesting that where the money is coming from and going to should be made clearer and more transparent.

In previous meetings we have considered development constraints. We would like to hear your views on them. It is clear that there is an important difference between a developer of a large private development and a developer of small social housing developments. I want to link the question to the fact that you want to see ministerial discretion being used a good deal more. If those two matters come together, perhaps you could expand on that theme.

Development constraints are a huge issue for all councils in Scotland and we will certainly expand on the matter in our later submission, which we are currently working on.

I do not think that there is a council in Scotland that is not experiencing stagnation or problems in relation to business development, housing development or any development—you name it. Under the next quality and standards III discussion, we should consider apportioning a certain amount of the money to new development. The topic is huge and is not confined only to the environment—it involves the minister who is responsible for housing and it involves all other ministerial remits—and we think that it should be dealt with and discussed at the highest level. If we do not reach a solution to apportioning some money under quality and standards III to development in Scotland, we will see stagnation. There will be a huge loss of income generation and stagnation in job increases.

One need only consider Glasgow and some of the bigger cities to see the potential problem. Glasgow needs about £200 million to fulfil its development potential—that is just one city. If the rest of Scotland is considered, it can be seen that the problem with development is massive. Obviously I do not expect the problem to be solved overnight, but we should address it to some extent in the immediate future.

Would you say something about ministerial discretion?

Ministerial discretion is mainly for disputes that might spring up among the proposed commission, Scottish Water and other bodies in consideration of charging regimes. If ministers give themselves powers of intervention, those powers should be used when a dispute arises.

Do you accept that in the Q and S II discussions, development constraint was insufficiently flagged up? Local authorities have now provided information about the scope for development and about the local and structural planning implications. Are you satisfied that robust data on that have gone into the Q and S III discussion?

COSLA has robust data now and can make them available. We have striven to collect data from each local authority and I know that all local authorities will probably make submissions on Q and S III. We are collecting those data and will make a robust case.

We are discussing what is almost the number 1 problem of councils, whether urban or rural, although the problem differs between urban and rural scenarios. Developer input into larger projects might be wanted in an urban area, whereas in a rural area a project might involve just two or three houses in a small village—which will nevertheless be important to that village—and the developer will not make the same input, because that would make projects unaffordable.

Under Q and S II, local government wanted to tackle development constraints, but we were informed that that did not fall within its scope. When Q and S III was announced, we were told that it would allow development constraints to be addressed. As we were when Q and S II was issued, we are keen to come together. As Councillor Hay said, individual councils will submit robust examples and data. COSLA will also produce a joined-up national submission.

That is important and it is one reason why we are asking our questions. We are conscious that implementation of the bill will depend critically on what happens with quality and standards III and the challenge of "Investing in Water Services 2006-2014". We are trying to join up that scrutiny, if not the answers. We will certainly pose many questions to the minister when he appears before us in a couple of weeks, so your views are important to us.

I saw nothing in the committee's papers about an example of SUDS in Fife.

SUDS stands for sustainable urban drainage systems.

SUDS is favoured for the future. In Fife, we are working with a development of 6,000 new houses in which the problem is the question of where future liability will lie. I hope that the bill will cover that. The private sector has developed and built the SUDS in conjunction with the local authority, but the difficulty is with Scottish Water taking responsibility for the system's future care and maintenance, because the system is above ground. Scottish Water says that sustainable drainage becomes its liability after it goes into pipework and below ground. If we are looking for future developments—SUDS looks to be a positive way forward—we should also consider care and maintenance and the impact of potential flooding in communities if such developments are not maintained.

I thank you for that practical point, which we will put to the minister.

We all agree that a way is needed of creating new infrastructure for affordable housing. Do you have any thoughts on where the money for that should come from? It could come from other water users, but should it come from Communities Scotland? Do you care where it comes from, if all that you want is the money?

There has been some discussion—and recently, some movement—in relation to charging for second homes, which will bring extra money to Scottish Water. It has been suggested that that extra money could be used to fund the infrastructure that is needed for the new affordable housing. It would be useful if we could marry the extra money that is given to the registered social landlords with the extra income that Scottish Water will receive as a result of charging for second homes. We think that that would make a nice, round package. It will not solve the whole problem, but it would be a start.

How far would that go?

We have not done any detailed work on the issue. We were discussing it in relation to a submission that we have yet to make.

We heard from the SCVO about the problems that voluntary organisations are facing. Does COSLA have any experience of voluntary organisations being in difficulties because of the hoops that they have had to jump through to access support?

I sit on the board of the Scottish Association of Local Sports Councils. For a number of months, we have had a great deal of discussion with voluntary sporting groups who have identified the fact that their bills have increased considerably due to water charging—some groups' bills have gone up by 700 per cent. That has had a great impact on the voluntary sector. I know that the minister was considering that carefully. Our submission to the Executive should focus on how we can avoid disadvantaging communities by over-charging voluntary groups for their water.

The corollary of that is the question of who should pay for that support. Should it be the water charge payer or the general taxpayer?

That is a good political question.

COSLA is not taking a collective view on that, I take it.

No.

Previously, consumer panels have suggested to us that their role and remit should be strengthened and extended. I do not expect you to answer a question on that today, because it has come out of left field, but I suggest that it might be possible to expand their remit to include all water users, including private users, which come under the aegis of local authorities rather than Scottish Water. Would it be possible for you to give us a response to that idea in the next few weeks?

Yes.

There would be a deadline of two weeks for that response if we are to incorporate it in our report. That would be helpful.

I wanted to talk about the principles of the bill. You have said that you would be keen to get further information and assurances on the licensing system, which would limit retail competition to non-domestic supply only. What kind of reassurances are you seeking?

COSLA is not happy about competition being extended to the domestic sector, which we think should be safeguarded in the interests of quality, sustainability and safety.

That is common carriage.

Sorry?

I will let you ask a question once Councillor Hay has finished answering my question, Alex.

Having various companies supplying water to domestic users, in the way that we have various companies supplying electricity and so on, would cause concern among the public, although I can see some benefit in the retail sector. I have read through the bill, however, and I think that the proposed licensing goes some way towards safeguarding some of the issues that are being raised with us by the non-private sector.

By referring to limiting retail competition and phasing it in slowly, the bill recognises what COSLA is trying to say. We need to take a cautious approach, and to analyse how effective competition can be, as well as the implications and limitations of such a system. We are seeking further reassurance and more information. As the bill seeks to introduce limited competition, we should learn from and assess that. It is not about opening up the doors, but reviewing how the system proceeds and, if necessary, being able to stop the process if it is adverse to what we want.

What assurances are you after? Are you worried about the impact of retail competition in the non-domestic sector on domestic consumers? Do you want more information about how the system will work and the impact on local authorities and non-domestic customers? I am trying to tease out what that paragraph in your submission means. I take the point that you agree with the principle that the domestic customer market should not be opened up for retail competition. I am just trying to get a sense of your concerns about the limiting of retail competition.

We are advocating a cautious approach. We are not saying that the market should be opened up completely and immediately with no one watching what is happening. If we start allowing companies other than Scottish Water to come in and sell water, we must be sure that we are safeguarding the infrastructure and that there is provision for upgrade, should that be necessary. Those safeguards should be wrapped up in such proposals.

You were talking about the impact on local authorities. As with all areas, we would hope that the commissioner would consult COSLA and local government on the impact that the system will have so that we can be aware of that, and advise or offer experience.

Most objections to the idea of retail competition in the domestic sector seem to relate more to common carriage, which is a different argument and we might have different views on that. The main argument that has been made against retail competition in the domestic sector is that current pricing in the domestic sector is designed to facilitate massive cross-subsidy within that sector. That takes us back to the question that one of your colleagues resisted answering a few minutes ago. Who should be paying for those who cannot afford to pay water charges? Should it be other water charge payers or should it be a broader, social security issue?

I will stick my head above the parapet. We should be helping those who are less well off. I would want a cross-subsidy to continue. Where we can cost-effectively raise finance in a more compact region, and get surplus money, that money should be used to help those in regions where we cannot raise money and the service costs more. It makes sense to view the domestic sector as a Scotland-wide set up. We should be making sure that everyone gets their water as cheaply, cleanly and sustainably as possible. If that means that certain regions have to subsidise others, that is only right and proper. For example, we want to take care of the least well-off in our communities, so those who are well off and are able to contribute more should do so. That is how society should work.

Is there not an argument that it would be more appropriate to go down a road where water customers paid for the services that they got and we eliminated cross-subsidy? You expressed a desire to ensure that the less well-off and those who need assistance are provided with that assistance. Should that not be handled in conjunction with, say, housing benefit rather than as a cross-subsidy within the water charges system?

It could be a bit of both. I do not think that there is an easy solution. We should charge domestic customers as little as possible; we should ensure that those who can afford to, do pay; and we should ensure that those who are having difficulty because they have limited incomes and limited ability to raise income are helped by others. It is your decision whether that is done through a cross-subsidy on the water side or through benefits.

It will be the minister's decision, but we are taking evidence on the subject.

I meant the politicians' decision.

On a related point, I presume that COSLA supports the geographical subsidies that are in place and the fact that there is one charge regardless of where people live.

Yes, we do.

Do colleagues have any other questions?

I would like to go back to water poverty. We have been talking about people on benefits, but people who are in waged poverty—on low incomes but not in the benefits system—will perhaps fall within the water poverty threshold. How do we ensure that those people are captured within that net? The current focus seems to be on rebates through the benefits system. What about people in waged poverty?

I suppose that the question is where we draw the line. If people are slightly over or under the line, they tend to get squeezed. It is difficult to know how to deal with that. I do not have an easy answer.

The suggestion was made earlier of 3 per cent of household income being a good indicator of the sustainable affordability of water.

Not having thought about that, I do not feel qualified to make any comment on that at the moment.

It would be useful to know COSLA's position on that. Other organisations are responding to us on it.

Can we get back to you on that, having given it some thought?

Yes. That would be great.

We will give you that answer in writing, along with the answer to the other question, in two weeks' time.

Thanks.

No one else is queuing up with a question. Thank you for coming along and giving evidence today.

We have dealt with all our other agenda items, which we rolled forward to fill the gap earlier. Our next meeting will be on Wednesday at 9.30 am. We will discuss a motion for the annulment of a statutory instrument on the restriction of the use of lead shot. The Deputy Minister for Environment and Rural Development will be with us for that discussion at the beginning of the meeting. I thank colleagues and witnesses for their attendance this morning.

Meeting closed at 12:23.