Traditionally, surface water
drainage charges have been based on the rateable value of
properties, as allocated by the Valuation Office. Places of
worship, along with other specific groups and organisations, did
not have to pay these charges because of their zero rating. Four
water companies, Yorkshire (2001/02), Severn Trent (2000/01),
Northumbrian (2006/07) and United Utilities (2008/09), have
switched from rateable value to area based charging.
The Government supports site area
charging for surface water drainage in principle, because it
offers financial incentive for customers to install sustainable
drainage systems which improve water quality and prevent surface
water flooding. However, the Government believes that it is
clearly very wrong if customers such as faith buildings,
community amateur sports clubs and scout huts are facing hikes
in their bills of several hundred per cent, and where there are
massive variations between what is being charged in different
areas by different companies.
The Government recognises the
level of concern over charges for surface water drainage,
especially in some areas of the country and for some groups
where increases in charges have been disproportionate and
insensitive to the needs of water companies’ customers.
It is ultimately for the water
regulator Ofwat, the independent economic regulator of the water
industry, and individual companies to agree a fair and
proportionate system of charging that is sensitive to those
organisations who previously enjoyed a cross-subsidy. However,
Defra has made the Government’s position clear to Ofwat and to
the Chief Executive of United Utilities (whose customers have
been most affected, including as a result of miscalculated
bills). We have also made it clear that increases in bills of
this magnitude are not in line with Defra’s guidance on charging
issued to Ofwat in 2000, or Ofwat’s more detailed 2003 guidance
to the water companies.
In particular, Ofwat’s
guidance states that companies that are thinking of introducing
site-area charging need to assess possible impacts on all
customers’ bills. Ofwat’s guidance goes on to state that
companies will need to take into account the scale and speed of
any bill changes to see if they are reasonable and acceptable to
customers.
It is for individual companies
to prepare their charging schemes and for Ofwat, as the economic
regulator of the water industry, to review and approve them.
Customers with sensitive properties, who are concerned about
disproportionate increases in their bills, or inaccurate bills,
should raise their concerns with their water company in the
first instance or, failing that, with the Consumer Council for
Water.
United Utilities has been the
focus of many of the recent concerns expressed in the media and
in representation directly to Defra. As noted above, Defra has
conveyed its views on this issue to Ofwat and to the Chief
Executive of United Utilities.
In response to such
representations, United Utilities now proposes to set its
surface water drainage charges for 2009/10 at 2007/08 levels for
customers such as faith buildings, community amateur sports
clubs and scout huts (i.e. at levels prior to the introduction
of site area charging), and is also committed to finding a long
term solution to this problem for 2010/11 and beyond. This is a
very welcome step forward although Defra will continue to
monitor this issue and engage further with Ofwat as necessary.
