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Flood and Water Management Bill

My Lords, I, too, congratulate the noble Lord, Lord Addington, on his ingenuity in returning to the subject in this way. The group of amendments relates to Clause 43 on concessionary drainage charges for community groups and to the relationship between Clause 43 and Clause 44 on social tariffs for individuals. Amendment 104 proposes to make two changes to Clause 43 that would bring it more into line with the approach taken in Clause 44. It would mean that cross- subsidy is allowed for in concessionary schemes for community groups, and that while Ofwat's powers in connection with the approval of charges schemes still apply, they are subject to the provisions in subsection (1) and the new subsection (1A) proposed by this amendment. Concessionary charges for community groups will involve only extremely small amounts of cross-subsidy by other customers. On the other hand, the cross-subsidy involved in social tariffs for individuals could potentially be much larger, running into several pounds rather than just a few pence. Furthermore, the first part of the amendment would provide that concessionary schemes can include subsidisation by other organisations and businesses. This does not need to be set out in the Bill. Including it could infer that non-domestic customers were expected to pick up the tab. The Government’s view is that it is for undertakers to set their charges schemes in a way that ensures a fair breakdown of charges between domestic and non-domestic customers. Ofwat ensures that this is the case. For these reasons the amendment is unnecessary. I recognise that there is a legitimate question about who should provide the subsidy to community groups. I refer noble Lords to paragraph 3.11 of the draft guidance that has been circulated to noble Lords. It proposes that both domestic and non-domestic customers are best placed to share the cost of the cross-subsidy to community groups. It states: ""Undertakers will need to decide whether the cross-subsidy that community groups will receive is met only by non-household customers or by the undertaker’s customer base as a whole"." Government Amendment 105—and I thank noble Lords for their welcome for it—enables water and sewerage undertakers to operate concessionary schemes for community groups for surface water drainage charges. It enables the Secretary of State and Welsh Ministers to issue guidance to undertakers; and undertakers are required to have regard to this guidance. Our view is that Ofwat would also have to have regard to this guidance by virtue of its responsibility as the independent economic regulator responsible for approving undertakers’ charges schemes. However, concerns were raised during Second Reading around whether Ofwat would have regard to our guidance, particularly as Clause 44 on social tariffs makes it explicit that both Ofwat and undertakers must have regard to the guidance issued under Clause 44. The purpose and effect of the government amendment is therefore to make it explicit that Ofwat as well as undertakers must have regard to guidance on concessionary schemes that may be issued by the Secretary of State and Welsh Ministers. The noble Lord’s Amendment 106 is virtually identical to government Amendment 105 and I hope, therefore, that the noble Lord will be satisfied with ours. On the question of publication of the draft guidance, it was made available to noble Lords at the start of the Committee stage. The final version will be available later this year. I should make it clear that the guidance will set a clear framework, and companies, as I have said, will have to have regard to it. The draft guidance provides at paragraph 4.2 a clear statement of the groups which we believe should benefit, including faith groups, scout groups, community amateur sports clubs and so on. We are aware that, in some parts of the country, particular water companies have got into difficulties with charges for community groups. I would like to put on record that we are pleased that United Utilities, after a sticky start, has agreed to extend its moratorium for 2010-11 to include village halls and community centres where these are owned or leased by community groups. They were not included in the 2009-10 moratorium but will now enjoy the same concessions as properties owned by scout and guide associations, faith buildings and community amateur sports clubs. These were the groups that were most disadvantaged by the switch to site-area charging for surface water drainage. I understand that any other group that is experiencing financial hardship can discuss this directly with United Utilities, which may be willing to prove assistance through its hardship fund. I hope that with these explanations, the noble Lord will feel that his amendments are unnecessary and that he will feel able to withdraw them.