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Flood and Water Management Bill

My Lords, I add to the apparent broad unanimity of all Benches in warmly welcoming this Bill and recognising its vital importance. However, from the perspective of community groups, churches and charities, a number of potential concerns remain; perhaps unsurprisingly, they focus on Clause 43. Most of your Lordships will be aware of the background to this, so I will try to be brief. Under Ofwat’s preferred charging scheme, the utility companies began to introduce site-based charging for surface water drainage for all customers. Churches, scout groups, village halls and the like had not paid rates on their buildings, and therefore had been exempt from the old system of water rates. Under the new system, they were presented with bills for surface water drainage for the first time. A number of concerns have arisen from this, which we have been pressing, and they are threefold. It was not the principle of the payment that was the problem but the scale of the new charges and the wide variation in charging schemes between the utility companies implementing the new system. For example, St Cuthbert’s, Seascale, in the diocese of Carlisle, was facing an annual increase of 591 per cent over three years: from £34.14 in 2008 to £205 in 2009, £364 in 2010 and £543 in 2011. Secondly, the situation was made worse by the fact that, although permeable ground, such as lawns, does not count for the purpose of the charge, some of the utility companies implementing the new system often did so simply on the basis of the site boundaries on the Ordnance Survey map, leaving it to the unfortunate customer to commission and pay for an independent site survey in order to prove which parts of the site were permeable and which parts drained into the sewer. Finally, when one utility company, Severn Trent, decided to continue treating places of worship as it had done in the past, it was told by Ofwat that the new charging regime did not allow it to do so. Community groups have pressed Ministers hard on this and the issues raised here, and I am very grateful for Clause 43, which is the result. It is an acceptance by government that community groups should not be treated on the same basis as commercial customers. Most churches and charitable groups warmly welcome this change of heart on the part of government. I acknowledge how hard they have worked to give us Clause 43, which, together with the very helpful draft guidance published by Defra, appears to go a long way to meeting our concerns. However, there is one other major point which we think requires further clarification. Subsection (1) says: ""An undertaker’s charges scheme under section 143 of the Water Industry Act 1991 may"—" I repeat: may— ""include provision designed to reduce charges to community groups in respect of surface water drainage from their property"." So, as drafted, the subsection is permissive rather than mandatory. Our understanding is that this is because, first, not all utility companies have yet introduced surface-water drainage charging; secondly, not all of them intend to do so, although we are not quite sure how this squares with Ofwat’s preferred policy on charging; and, thirdly, if the terms of the clause were mandatory, utilities that had no intention of introducing surface-water drainage charging systems would be obliged to do so willy-nilly. Therefore, there are some points for further clarification here. In addition, there are two minor points that we think also need clarification. First, paragraph 3.1 of the draft guidance that was made available to the Public Bill Committee in another place states: ""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 surface water drainage. We expect undertakers to ensure that this is the case and Ofwat will ensure that undertakers have had regard to this guidance in its approval of individual charge schemes"." Unfortunately, however, the draft guidance does not provide a definition of what is a "fair and affordable" charge for community groups. Ofwat is charged with overseeing the concessionary schemes and making sure that water companies have regard to the guidance, but at the moment Ofwat is expected to guess at what is fair and affordable. I think that a little more work is needed in this area. Secondly, the draft guidance talks about "places of public religious worship". Does that include church halls as well as churches themselves? Alternatively, are church halls included in the category of village and community halls, community centres and similar buildings owned or leased by community associations? Do the Government expect a differentiated approach to the various categories that might be adduced here? At some point during the passage of the Bill, clarification on both those points would be welcome. In conclusion, I am looking for an assurance from the Minister as to whether our reading of Clause 43 and the word "may" is correct. If it is, we would like a further firm assurance that, in spite of the wording of the clause, all utility companies that have introduced surface-water drainage charging or which intend to do so will be obliged to make provision to reduce those charges for community groups, which is what the draft guidance seems to imply, and to levy what will be a fair and affordable charge in reality, not merely in some theoretical sense yet to be determined. I fully expect that the Minister will be able to give such assurances but, in their absence, we will no doubt wish to come back to this matter in Committee.