"PAYING FOR Water Services 2006-2010"
QUALITATIVE RESEARCH REPORT
EXECUTIVE SUMMARY
BACKGROUND & OBJECTIVES
1. mruk research were commissioned to carry out research by the Office of the Chief Researcher in the Scottish Executive, on behalf of the Water Services Division. The principle aim of the project was to generate qualitative information from customers with respect to views held on issues raised in the consultation paper "Paying for Water Services 2006-10".
METHODOLOGY
2. 12 group discussions were carried out with a sample broadly reflective of the Scottish population in terms of age, life-stage, location and socio-economic group. In addition, specific groups focused on single occupants and second home owners, as there were proposals in the consultation paper relating specifically to these types of water customer. An additional 10 depth interviews were carried out with small businesses (mainly un-metered).
KEY MESSAGES
3. The consultation was seen very positively by participants, who were pleased to have been involved in the process. There was no awareness of the consultation prior to participating in the research.
4. The suggestion that Scottish Water should pass all costs to customers through charges prompted a good deal of discussion of other options such as metering or taxation. Ultimately most domestic and non-domestic participants accepted that costs should be passed to customers through charges.
5. The idea that charges should be as affordable as possible for low income households resulted in much debate also. It was acknowledged that there was a precedent for this in society and about half of domestic and business participants were in support. However, the other half strongly disagreed and did not want to subsidise anyone.
6. There was widespread household and business support for customers paying on the same basis wherever they were in Scotland. Other utilities were delivered and charged in this way and therefore it was thought to be acceptable and fair.
7. A strong demand for any charge increases to be gradual was apparent amongst domestic and non-domestic participants in the research.
8. Consultation point three (discussions about possible cross-subsidies and how to deal with them) resulted in confusion and scepticism amongst the participants. There was a high degree of concern that achieving the right balance could lead to big charge increases for domestic customers. Small increases would be tolerated, but significant increases would result in dissatisfaction and resentment.
9. Abolishing the single adult and second home discounts were seen by most as an acceptable logical means of generating a fund for a low income discount. However, working, single adult occupants expressed high levels of dissatisfaction with abolishing the single adult discount.
10. Only non-domestic participants were asked for their attitudes to the principles detailed in consultation points five and six. Calculating Surface Drainage charges on the basis of surface area was seen as fair and logical. Furthermore, creating unmetered property charges on the basis of three bandings based on likely consumption due to type of business was also seen as an acceptable way forward.
11. Most participants (especially non-domestic) were supportive of enhancements to water services being funded through a combination of charges and borrowing as set out in the consultation paper.
12. The last point in the consultation was for developers to make a financial contribution to funding additional capacity, when their developments meant that this extra capacity was needed. This was seen as fair and logical, though some customers were also happy to contribute to developments for the general good of society e.g. social housing.
CHAPTER 1 INTRODUCTION AND BACKGROUND
INTRODUCTION
1.1 mruk research were commissioned by the Office of the Chief Researcher in the Scottish Executive, on behalf of the Water Services Division, to carry out research in support of the consultation "Paying for Water Services 2006-10".
1.2 In this document we will outline the objectives of the research, the methodology used and the key findings and outcomes from the research.
BACKGROUND
1.3 Over recent years Scottish Water have been responsible for delivering a number of major programmes of improvements with respect to water quality and standards in Scotland.
1.4 Through vigorous regulations by the Water Industry Commissioner for Scotland, SEPA and the Drinking Water Quality Regulator for Scotland, Scottish Water is on course to achieve targets set with respect to cost of improvements and for reducing annual operating costs by 2006.
1.5 Such achievements will allow for customer savings over the period 2002-2006.
1.6 The Water Services (Scotland) Bill will look to address provision for further improvements with respect to strengthening current economic regulation processes, by making such operations more transparent to customers.
1.7 As part of this, consideration must be given not only to Scottish Water's standards and objectives, but also to how Scottish Water's customers can fairly contribute to the costs of the services they receive.
1.8 Such decisions will have a clear impact on all Scottish Water customers, including both domestic and business audiences.
1.9 As such, prior to Ministers deciding on policy with respect to the principles of charging, a period of consultation is being undertaken. Such a consultation exercise will prove invaluable in aiding Ministers in the decision making process, and is an imperative part of the SRC for the period 2006-2010.
1.10 A written consultation process was launched in July 2004, with 5,500 copies of the "Paying for Water Services 2006-2010" consultation paper being distributed to a wide range of organisations and individuals including Local Authorities, Industry Groups and Professional Bodies, eliciting views from a number of audiences.
1.11 This research was required to focus on domestic customer views, an audience considered least likely to be fully represented by means of the written exercise.
1.12 Given that such decisions are likely to affect almost every household in the country, including the views of non professional / business audiences was also critical.
CHAPTER 2 RESEARCH OBJECTIVES AND TARGET AUDIENCESRESEARCH OBJECTIVES
2.1 The principle aim of this research was to ensure the generation of qualitative information and feedback from customers with respect to views held on the issues raised in the consultation paper "Paying for Water Services 2006-2010".
2.2 Specific objectives considered were to:
Identify the full range of views presented
Highlight general trends and majority / minority views
Identify views held by particular participant types
Identify where firm views were expressed, or points where customers would be unlikely to accept compromise
Highlight and consider any contradictions or abnormalities that emerge
Identify where participants offer significant alternatives to the policy choices covered in the consultation paper
2.3 It is worth noting at this stage that the research findings between various types of customer were largely consistent with few significant, notable differences. These variations have been noted where they occurred.
TARGET AUDIENCES
2.4 The main focus of the research was domestic customer views.
2.5 In particular, consideration was given to:
Urban / rural areas
Domestic customers
Small businesses
Single occupants
CHAPTER 3 RESEARCH METHODOLOGYDOMESTIC CUSTOMERS
Method
3.1 Given the broad exploratory and discursive nature of the objectives, a qualitative focus group methodology was deemed most appropriate to elicit the depth of information required.
Sample Design
3.2 It was important within this project to have as wide-ranging a sample as possible to ensure all variables were covered. The following sample criteria were taken into account.
Location: It was important to ensure urban and rural coverage across Scotland.
Age: Previous research has shown that attitudes towards utilities and utility services can be determined by age / lifestage. It was critical that a broad spread of age / lifestage was included in the sample design.
Socio-economic criteria (SEG): SEG can also be a factor, in that certain SEG's will often hold common opinions and attitudes and this was also considered in structuring the sample.
Gender: A gender split was deemed unnecessary, as participants' lifestage and area of residence was felt to have more impact on attitudes and opinions.
Single occupants / lifestage: Given the nature of the consultation it was essential to include single people of different ages and lifestages, and also people who had second homes.
3.3 The following group structure was implemented.
GROUP | STATUS | AGE | SEG | LOCATION |
|---|
1 | Single, independents (sole occupant) | 20-35 | AB | Glasgow |
2 | Married / co-habiting (no kids) | 26-35 | DE | Glasgow |
3 | Married / co-habiting (with kids) | 30-45 | AB | Irvine |
4 | Empty nesters | 56-65 | AB | Irvine |
5 | Retired (sole occupants) | 65+ | C1C2 | Peebles |
6 | Single, independents (sole occupant) | 30-45 | C1C2 | Peebles |
7 | Single parent | 18-30 | C2DE | Aberdeen |
8 | Married / co-habiting (no kids) | 26-40 | AB | Fort William |
9 | Empty nesters | 56-65 | DE | Aberdeen |
10 | Retired | 65+ | AB | Edinburgh |
11 | Those with second home | 35-55 | AB | Edinburgh |
12 | Married / co-habiting (with kids) | 20-35 | C2DE | Fort William |
Discussion Guide & Projective Techniques
3.4 Consideration was given to 'pre-placement' of background information about the consultation at the recruitment stage to aid the deliberate method. Such a tactic is often employed when participants are required to read documentation in advance of fieldwork commencing, to aid the overall time and flow of group discussions.
3.5 However, in this particular instance, pre-placement of any background information was seen as inappropriate. The subject matter in this instance was not perhaps the most immediately 'interesting' for many people and it was felt that pre-placement could have affected the turnout at groups, effectively putting people off attending. Furthermore, as many of the issues contained within the consultation document were complex in nature, information provided to participants in advance could have resulted in more confusion (without the aid of moderation control / intervention).
3.6 Instead the groups were carried out with the moderator providing simple descriptions of the key consultation points to participants. In this way it was possible to ensure that participants had a very clear understanding of each point in the consultation before they were asked for their views or perceptions. This was often achieved through the use of scenarios (see appended topic guides). Any misunderstandings were corrected and the pros and cons of alternatives fully discussed and explored. This deliberative method ensured that the participants in the research had a good understanding of the issues in the consultation, and were able to discuss the points before giving an informed and educated viewpoint.
3.7 By using extended focus groups it was possible to ask domestic participants about all the points affecting them (not points five or six). The use of extended groups allowed in-depth discussion and debate. Interestingly, this led to consensus in most groups.
3.8 Following two face-to-face meetings mruk drafted the topic guide with input, comment and approval from the Scottish Executive Water Services Division.
Recruitment
3.9 Groups were recruited using a pre-agreed recruitment questionnaire by locally based and trained recruiters.
3.10 The recruitment questionnaire initially disguised the topic of the focus group to maximise attendance and prevent participants trying to find out more about the subject matter. Obviously this would have prevented us from gaining a true understanding of their awareness of the consultation itself.
3.11 Participants received a financial incentive of £25 to encourage participation in the research.
3.12 Each group discussion lasted between one and a half and two hours, and each was moderated by a Director of mruk.
3.13 The group discussions were tape recorded for analysis. In line with the Market Research Society Code of Conduct, all participants were informed of this at the recruitment stage.
Data Analysis
3.14 Analysis was carried out concurrently with data collection. The project team met, discussed and reviewed the findings from each group immediately afterwards.
SMALL BUSINESS CUSTOMERS
Method
3.15 For this particular audience, an in-depth interview method was deemed most appropriate for exploring attitudes and opinions regarding consultation points amongst the small business community.
3.16 In-depth interviews were conducted either face to face or via the telephone depending on the participant's preference.
Sample Size and Recruitment
3.17 A sample of 10 depth interviews were completed as part of this research.
3.18 These depths covered a range of areas across Scotland:
Glasgow
Lanarkshire
Fife
Inverness
3.19 Interviews were also carried out with businesses from a range of sectors:
Guest house
Launderette
Printer
Hairdresser
Takeaway
Solicitor
Jeweller
Estate Agent
Grocer
Café
3.20 The interviews included 7 un-metered and 3 metered properties.
3.21 Potential participants were written to in order to advise them about the research. This was then followed up by telephone to recruit participants.
3.22 Interviews were conducted using a semi-structured discussion guide, drafted by mruk research and approved with comment and input from the Scottish Executive. These interviews each lasted 20 - 30 minutes and were also tape recorded.
3.23 An incentive of £30 to a charity of the participant's choice was given as an appropriate incentive.
CHAPTER 4 RESEARCH FINDINGS
4.1 The consultation document presented eight points for discussion and debate with the domestic and non-domestic participants. It was important that the participants gave their views and opinions based on a true understanding of all the pertinent issues, advantages and disadvantages of each point presented in the consultation document, and the alternatives which in many cases the participants suggested spontaneously. Therefore, unlike many group discussions these were very deliberative and the participants were equipped with more knowledge and information than most group discussions. This was essential in order to develop a true understanding among the participants and allow them to respond appropriately to the points raised by the consultation document.
4.2 Some of the eight points raised by the consultation were more relevant to domestic and some to non-domestic audiences. Given the time restrictions of this research it was not always possible to have a full debate and discussion about all of the points raised in the consultation. Points 5 and 6 of the consultation document (see separate document) were not discussed at all with domestic customers aside from two groups where these issues were raised by the participants themselves. The non-domestic depth interviews were slightly more restrictive as there was a maximum of 30 minutes with each participant. Points 1, 2, 5 and 6 were discussed with all non-domestic participants and the remaining points were discussed in rotation, or if spontaneously raised by the participants themselves.
4.3 The research findings are discussed here for domestic and non-domestic participants in relation to each of the consultation points. It is worth noting that in relation to the consultation points more relevant to a domestic audience, non-domestic participants tended to hold the same attitudes and support the same principles as the general public. Their views are still relevant as they were also domestic bill payers.
AWARENESS AND UNDERSTANDING OF WATER & SEWERAGE SERVICES AND PAYMENT
4.4 Amongst domestic participants there were mixed levels of awareness about who provided water and sewerage services. In particular lower awareness was found amongst those aged less than 35 years. It was found that there was very often lower spontaneous awareness that rose significantly once the moderator had prompted with Scottish Water as the provider. Indeed, with prompting most participants were aware that Scottish Water was the provider of their water and sewerage services. A slightly higher degree of confusion was apparent in Fort William where a number of participants believed that North of Scotland Water or NOSWA was the provider.
4.5 About a quarter of the group participants overall still thought their water and sewerage service was provided by the Council. In many ways this belief was fuelled by the knowledge that they paid their water and sewerage bill with their Council Tax.
4.6 Awareness of Scottish Water as the provider of water and sewerage services was found in all non-domestic participants.
4.7 Very low levels of contact were recorded overall. In Irvine there were a small number of repeat contact participants due to the perceived poor quality of the drinking water which was seen as dirty.
4.8 The vast majority of participants were spontaneously aware that their water and sewerage charge was added to their Council Tax bill. Most of the participants paid their Council Tax bill by direct debit and this contributed to their lack of knowledge about exactly how much they paid. It was found that the majority of domestic participants did not know how much they paid, although a minority were aware of the cost per month or year for their Council Tax and water / sewerage charge combined.
4.9 Non-domestic participants also had varying levels of awareness of how much they paid for water and sewerage services. Those in metered properties had better appreciation.
4.10 Although the domestic participants had a very low level of contact it was apparent that there had been a wide range of mainly minor problems or difficulties with Scottish Water in the past. Many of these related to dirty water or peaty water (particularly Irvine). In Fort William there appeared to be a problem with the water being over chlorinated resulting in foul tasting and cloudy water. There were also a small number of participants in the Glasgow group discussion who had experienced contamination problems. There were several participants from across the groups who had experienced service disruption or old pipes leaking. On the whole these problems had been resolved quickly and communication from Scottish Water had been good and frequent. Therefore, the majority of participants perceived any problems or difficulties as being very minor. There was a small number of dissatisfied customers with ongoing problems relating to dirty or over chlorinated water. The participants who had experienced these ongoing problems were often dissatisfied with Scottish Water's response, felt that they were slow to try and resolve a problem and sometimes would not accept that there was a problem.
AWARENESS & UNDERSTANDING OF THE CONSULTATION
4.11 None of the domestic participants had heard anything recently in the news about "Paying for Water Services". Even with prompting none of the domestic participants had heard of this consultation. There was limited recall amongst some non-domestic participants of something in the news about water charges, but no direct knowledge of the consultation.
4.12 The consultation process was very much welcomed. Indeed at the end of the group discussions and interviews, many participants commented how pleased they were at being given the opportunity to express their opinions. However most participants were sceptical about how much impact on Scottish Executive's decisions such a consultation would have. It was the majority belief that the Scottish Executive would push through any changes which they saw as appropriate regardless of the public response to the consultation document.
CONSULTATION POINTS 1 & 2
Scottish Water should Pass all Costs to Customers through Charges
4.13 The participants were read the following description: "The Scottish Executive proposes that Scottish Water should pass all costs to their customers through charges. This would include providing water, treating water, maintaining infrastructure and improving it where required. There would be no element of profit: Scottish Water would only recover sufficient funds to pay for the services and any work that must be done. They were then asked about how appropriate they considered this principle to be.
4.14 Many of the participants' initial response to the idea that customers should pay for all of Scottish Water's costs through charges, was to suggest other options such as metering or taxation. This section will consider the participants' attitudes to taxation first.
4.15 Participants were unhappy that under-investment by previous local authorities or central Government had lead to them having to pay more now. There was a strong feeling that the general public should not have to pay for previous Local Authorities' mistakes. Therefore it seemed logical to most participants that Local Councils, Scottish Water or Central Government should foot the bill as required as a result of under-investment. Few of the participants initially realised that this would result in increased taxation as the relevant authority sought to fund the new investments.
4.16 During debate, it was often a group member who highlighted that if these costs were paid by the Government or the Council there would have to be some form of taxation to recoup the monies required. Despite this, about a third of domestic participants still thought that taxation was an appropriate route to follow. This was particularly true of many of the ABC1 participants. Taxation was seen as appropriate because it was related to ability to pay and therefore there was no expectation that people on a low income would pay a high amount for their water and sewerage services. It was also felt that if the money was collected through taxation then anybody eligible to pay would have to pay. Many of the participants were angry that some peoples' refusal to pay Council Tax resulted in them having to subsidise charges. These participants supported funds being collected direct from the pay packet for that reason.
4.17 However, a majority of participants were concerned that taxation was not an appropriate route. Most of the participants who were currently working felt that raising the funds for investment by taxation would penalise people who were working and could ultimately result in some households making no contribution to the future investment in water and sewerage services. Many participants were also concerned that money raised through taxation could be spent in any way. This system of collecting money was not seen as being transparent enough, and some participants were concerned that it could be invested in any number of ways and would not necessarily result in a direct contribution to water services.
4.18 Once participants fully understood the cost implications of metering, this lead to metering being rejected wholeheartedly by almost all participants. It is worth noting that none of the participants had an understanding that 80% of Scottish Water's costs are fixed regardless of consumption. Furthermore there was no appreciation that the cost of installing, monitoring and replacing meters would actually add to the costs and make bills more expensive for customers. It was fundamental to the participants' rejection of metering that they understood these issues. A small minority of participants were concerned that some people (such as old age pensioners) may try to conserve water and in this way actually compromise cleanliness and health.
4.19 Ultimately, after discussion, the vast majority of participants thought it most logical that costs should be passed to customers. It was commonly felt that everyone should pay something and all customers regardless of income, house size or family size should make some contribution as everyone used the services. This opinion was held consistently amongst domestic and non-domestic participants.
4.20 Most of the participants were in agreement that this should be done through charges rather than taxation. The benefits of charging were that everyone who received the service would make a contribution. The amount paid for water and sewerage services would be transparent and could therefore be equated to the amount of work that was carried out, and correspondingly be used to demonstrate value for money. There was also concern (particularly amongst AB participants) that to start funding water and sewerage services via taxation could be logistically difficult and add even more costs for everyone to pay.
Charges should be as Affordable as Possible for Low Income Households
4.21 Most participants acknowledged that there was a precedent for subsidising low income households within our society. This was demonstrated in particular by our welfare state, our National Health Service and our education system all being largely supported through taxation - whereby better off people would pay more and less well off people would pay less.
4.22 There was a strong expectation (and often resignation) that this would happen whether or not the research or the consultation supported it. About half of the participants thought that it was acceptable or desirable for some people to pay more in order to subsidise low income households. This was especially true amongst C1C2 participants. This view was supported on the basis that water and sewerage was seen as an essential service and there was concern that some households simply could not afford to pay their bills. There was also a perception amongst a smaller proportion that if water and sewerage services were discounted for low income households then maybe those on low incomes would be more likely to pay and at least make some contribution.
4.23 About half of the participants strongly disagreed with the principle that charges should be as affordable as possible for low income households. There was a strong belief that everyone should pay for what they got and make a contribution. There was strong resentment because these participants felt they already subsidised low income households indirectly through taxation. It was seen as very unfair that working people should be forced to subsidise people who made a choice not to work or who were perceived as too lazy to work. There was also concern that a high proportion of people "cheated" the system e.g. pretending to be a single person household. This group of participants included those who were more supportive of taxation as a means of raising the money required for investment.
4.24 In group discussions which constituted working adults there was a particularly negative feeling towards the issue of subsidising people "too lazy or stubborn" to work. However, these participants were open to subsidising households with other employed adults, single parents or old age pensioners on a low income.
4.25 These perceptions and beliefs were held consistently amongst domestic and non-domestic participants.
Customers should pay on the same basis wherever they are in Scotland
4.26 There was widespread support for this principle. It was felt unfair to penalise those living in rural areas simply because their households were difficult to access. There was concern particularly amongst those in rural areas that higher charges in remote rural areas could lead to de-population. It was also pointed out that a precedent had been set by other utilities such as gas, electricity and telecoms who charged in this way everywhere in Scotland.
4.27 There was some expectation amongst rural participants that those in urban areas may resent this principle. This was certainly not supported by urban groups who strongly supported the concept.
4.28 Again there were no differences between domestic and non-domestic participants.
Future Charge Increases Introduced Gradually
4.29 This was seen as being essential in order to allow planning, budgeting and adjustment for householders and businesses. This was particularly true if significant increases were to be made over the period of 2006-2010. In fact, participants desired as much advance notice as possible - "no surprises".
4.30 A significant part of the group discussions were taken up by education about a number of factors affecting the principles upon which this consultation was based. Participants therefore noted that when being advised of charge increases the general public should also be told about a number of other issues. It was important that people had a good understanding about the savings and reductions in running costs which had already been made by Scottish Water in recent years. If the role of Commissioner was ongoing it was also important that the participants understood how this could affect the amount spent by Scottish Water. It was also important to have an understanding about how the money would be spent. This was of interest in a wider sense in terms of Scotland as a whole, and particularly in terms of the participants' local area. It was therefore important that the participants had some means of finding out what kind of improvements or upgrading would be happening in their area. It was strongly felt that it would be difficult for participants to accept significant increases in their charges without knowing what that increase was achieving for them.
CONSULTATION POINT 3
Cross-subsidies
4.31 As a whole the general public participants were very sceptical about the source of information that lead to the belief that some businesses may be over paying for their water and sewerage services. Given that many businesses were not metered the participants questioned that 'without metering how could this be assessed?' Additionally, the participants were concerned about how this situation arose and what measures were in place to prevent it from happening again.
4.32 In principle the majority of domestic and non-domestic participants agreed that businesses and households should pay for the service they receive in terms of water and sewerage. The participants simply couldn't think of any justification for any one group of people overpaying. There was a high degree of concern that redressing the balance between businesses and households could lead to very big charge increases for domestic customers.
4.33 It was felt that if the increase to households was small then it would be acceptable to even up charges gradually over time so that businesses and households were paying to cover only the services that they received.
4.34 However, if the increases were noticeable then this would lead to high dissatisfaction and considerable resentment. There was a perception that if a small number of businesses had managed to pay these water charges in the past then why could they not continue to pay? It was also believed that in comparison to other overheads such as rates, rent and staff that water and sewerage charges were relatively small, and therefore unlikely to actually put any businesses out of business. There was a strong desire for evidence that households were overpaying. It was also felt that businesses would be able to recover their costs by simply passing the cost onto their customers. The participants felt strongly that domestic customers were not at fault for non-domestic customers over-paying and therefore should not be penalised at this stage. This whole issue also raised the question with domestic participants that if some businesses were paying too much, were there possibly others who were paying too little?
4.35 There was a preference amongst the majority of participants to balance costs amongst businesses rather than even costs out between businesses and householders. This was true amongst non-domestic as well as domestic householders, probably because the businesses included in this research were small.
CONSULTATION POINT 4
Abolishing Single Person Discount to Fund a Discount to Low Income Households
4.36 There were mixed views on this principle amongst the domestic group discussions and non-domestic depths. When considering this issue it is important to bear in mind that about half of the domestic participants did not agree with the principle that charges should be made as affordable as possible for low income households.
4.37 At this stage many pointed out that most of the water bill was not based on the volume consumed or produced as waste. Therefore, there was a belief that there was no reason why single people should pay less than a family or a couple.
4.38 There was also a strong suspicion amongst many participants that this discount was easy to fiddle or fix and that many households claimed to be single person households when in fact they were not. Exceptions were made for some single groups such as single parents and pensioners on a low income. However it was noted that not all pensioners are low income households. Therefore the critical factor in determining who should receive a discount was related to low income and not to lifestage or living circumstances.
4.39 Assuming that single parents on a low income and low income pensioners were targeted by the new low income discount, most participants supported the abolishing of a single person discount.
4.40 Retired sole occupants similarly expected to be included in the new discount and were supportive on that assumption.
4.41 However, most sole occupants of working age thoroughly resented their discount being abolished. It was felt that it was very difficult for people on a single income to afford a home of their own in the first instance. There was a strong desire amongst this group not to subsidise unemployed people. These participants appreciated that if a low income discount was to be enforced the funds would need to be raised in some way. There was a suggestion from these groups that the fund for low income discount could be generated by increasing all charges and still maintaining the 25% discount for single people, albeit on a slightly higher charge.
Abolishing the Second Home Discount
4.42 The vast majority of participants (domestic and non-domestic) agreed that this discount should be abolished and this was true even if participants had a second home themselves. It was strongly felt that if an individual could afford to have two homes then they could afford to pay a little extra for their water and sewerage charges. Participants again raised the issue that 80% of the cost is associated with the cost of providing the service and not consumption of water or production of waste. It was felt that this was a particular issue of resentment for people living in areas where holiday lets were common. In this instance residents saw their neighbours making a significant profit from a second home whilst still being eligible for a 50% discount on their property. This was particularly felt to be an issue in Fort William where in certain areas there was a shortage of housing and this was related to many houses being used purely as holiday lets, and lying empty for much of the year whilst making a profit for their owners.
4.43 A tiny minority of participants wanted the discount maintained. These were primarily AB participants and whilst they may not have had their own second home, they felt that if somebody had worked hard enough to afford a second home, they should be given every advantage possible.
4.44 A minority of participants expressed a desire to abolish the second home discount but use the money to cut all charges rather than simply fund the low income discount.
CONSULTATION POINT 5
Surface and highway drainage charges
4.45 This point was discussed only with non-domestic participants. The principle that surface and drainage charges would be calculated based on surface area was seen as a sensible and logical way of calculating the charge. Most participants perceived this as being fairer than the current situation as it was not felt that Ratable Value reflected the drainage requirements of most properties.
4.46 There were no spontaneous suggestions of other preferable ways to meet the costs.
4.47 A minority expressed uncertainty at how this would be calculated for multi-storeys. For example, one participant had an office on the second floor of a four storey block without any roof, road or car park and, therefore, was unsure how a surface drainage charge could be applied.
CONSULTATION POINT 6
Charges to un-metered non-domestic customers
4.48 Again this point was only discussed with non-domestic participants. As before, the concept of paying on the basis of Ratable Value was seen as unfair - in no way reflecting consumption or production of waste. Several of the participants suggested metering as an option but were totally accepting of the drawbacks of such a system.
4.49 The principle of un-metered non-domestic premises being charged on the basis of 3 bands broadly reflecting their likely consumption due to the nature of their business was seen as an appropriate and fair solution by all. It was essential that the bandings were considered, logical and justifiable.
CONSULTATION POINT 7
Borrowing provision
4.50 Most of the participants (domestic and especially non-domestic) agreed strongly that any enhancements should be funded through a combination of charges and borrowing. It was felt that this option would spread the cost of the investments over the lifetime of the changes and everyone who benefited would make some kind of contribution. This system was seen as being fair and logical. For many of the ABC1C2 participants this was in line with how they would approach their own finances, and it was seen as being a low risk strategy. It was expected that because of the size of the organisation it would be able to levy a reasonable interest charge which would not make borrowing prohibitive.
4.51 It is worth noting that a minority of participants (particularly DE) found it difficult to understand the relationship between charges and borrowing. These participants still agreed with the general principle that the costs should be shared between current and future customers as everyone would benefit.
CONSULTATION POINT 8
Paying for increased local capacity
4.52 There was widespread support (domestic and non-domestic) for the principle that developers should pay for any additional capacity required by their development. Again this was seen as being a fair and logical system and participants expressed some surprise that this was not already the case in all instances. It was felt that it levied no penalties towards existing customers and that developers would be able to pass the costs on to their own customers.
4.53 Some of the participants spontaneously raised the issue of "social" developments. This was seen as including primarily hospitals and the building of social housing by housing associations. There was concern that passing the costs of adding capacity for these developments to the developers could make the developments themselves prohibitive and, therefore, it was felt that in this instance Scottish Water and all their customers should make a contribution to costs. It is also worth noting that in Fort William where in some areas there was a distinct housing shortage, it was felt that any additional costs that would penalise new developments would ultimately have a negative impact.
ANNEX
TOPIC GUIDES: DOMESTIC AND NON-DOMESTIC
Domestic Topic Guide
Introduction
Thank participants for coming. Introduce self, MRUK, MRS Code of Conduct, length of group, tape recording session, confidentiality, etc;
Introduce observers - if relevant
Participant introductions: name, occupation, family composition; hobbies and interests
Explain topic for research related to water services in Scotland
Background
Which organisation provides your water services?
Have you ever had any problems or difficulties? (briefly!)
How do you pay for your water services?
Do you know how much you pay for your water services?
(At this stage moderator to clarify any areas of misunderstanding - require statement of annual charges)
Have you heard anything in the news about Paying for Water Services? (do not prompt)
Have you heard about the Consultation being undertaken by the Scottish Executive entitled "Paying for Water Services 2006-2010"?
Where did you hear about it?
What you know about it? What is the purpose of it?
(Moderator to clarify discussion by describing consultation emphasise to make charging fairer as they are very likely to increase due to the need for investment - the amount depends on the investment levels decided by Scottish ministers (happening in parallel with this consultation) - Give out background info and read through)
I'd like to work through some of the Executive's proposal principles that might be used when setting the charges and how those principles might be applied.
Consultation Points One and Two
The Scottish Executive proposes that Scottish Water should pass all costs to their customers through charges. This would include providing water, treating water, maintaining infrastructure and improving it where required. There would be no element of profit: Scottish Water would only be recovering sufficient funds to pay for the services and any work that must be done.
Do you think this is appropriate?
What do you like/dislike about this idea?
Can you foresee any potential problems?
What other option might there be?
The Consultation proposes that charges should be as affordable as possible for low-income households. This does involve all other customers paying a bit more to subsidise low income households.
Is this an appropriate principle? - Why / Why not?
Can you see any ways this might present a problem?
What other ways of doing this might work?
The Executive proposes that customers should pay on the same basis wherever they are in Scotland. So that someone in Band A in Wick would pay the same as someone in Band A in Glasgow. (This is so customers aren't disadvantaged if they live in an area that is more expensive service because it's rural, hard to reach etc.).
Is this a reasonable way to operate charges?
What do you like / dislike about this idea?
What problems might this raise?
Are they any alternatives you can think of?
In the past there have been sudden increases that people have found hard to cope with. In the future all changes / increases will happen gradually. This consultation proposes that any future charge increases should be introduced changes gradually over 2006-10, or longer where necessary.
Consultation Point Three
Consultation Point Four
Water and sewerage charges to domestic customers are billed and collected by local authorities when collecting Council Tax. They do this on behalf of Scottish Water. (This is convenient for customers who pay one bill and cuts the cost of billing for local authorities and Scottish Water). This enables water and sewerage charges to be made on the basis of Council Tax bands). This in turn means that those in higher Council Tax bands (who tend to be better off) subsidise those in lower bands (who tend to be less well off). (NB Moderator: there are no plans to change this)
There is a 25% discount for single adult household. This gives discounts to single parents and single pensioners for example, but overall it does not reflect ability to pay. Therefore for example well-off single people receive a discount not available to couples on very low incomes. (Council Tax is different in that poorer households are eligible for Council Tax benefit).
This discount costs approx. £65 million a year. The Executive proposes to abolish this discount and use the money generated to fund a new discount targeted at those who receive Council Tax benefit. This would target assistance at for low income households.
Would it be appropriate to abolish this discount and replace with a discount targeted at low - income households or should the current system be maintained?
Why / Why not? What do you like / dislike about this idea?
What problems might arise?
What other option might there be?
There is also a 50% discount on water charges available on second homes. Therefore, owners of second homes (who will usually be well off) are again receiving a discount.
This discount costs approx. £10 million a year. The Executive proposes to abolish this discount and use the money generated to fund a new discount for low income households, those who receive Council Tax benefit.
Would it be appropriate to abolish this discount and replace with a discount targeted at low - income households or should the current system be maintained?
Why / Why not? What do you like / dislike about this idea?
What problems might arise?
What other option might there be?
Note to Moderator: There has been some suggestion it might be better to meter all households so they pay on the basis of how much water they use. As only a very small number of households are metered at present they would have to install 2.2 million meters (£150 each), read them regularly and replace every 5 or 6 yrs. This would add even more costs. Standing charges high to maintain costs. Also 80% of Scottish Waters costs are fixed no matter how much water is used.
Consultation Point Seven
Consultation Point Eight (Use Flipchart)
In some areas there is concern about a lack of capacity in the public water and sewerage networks, and the fact that and this can constrain new development. One option would be for customer charges to cover all the costs of new capacity on the network. This would mean existing customers paying to enable new customers when their charges have increased anyway. As an alternative, the Executive proposes that customer charges cover costs of maintaining, operating and upgrading the parts of the infrastructure which benefit everyone at its current capacity. Where additional capacity is required specifically for new developments, (i.e. benefiting only the new development) the developers would be charged for that part of the infrastructure.
Sum up and close
Non-Domestic Topic Guide
Introduction
Thank participants for coming. Introduce self, MRUK, MRS Code of Conduct, length of group, tape recording session, confidentiality, etc;
Introduce observers - if relevant
Participant introductions: title, role, background to company
Explain topic for research related to water services in Scotland
Background
Which organisation provides your water services?
Have you ever had any problems or difficulties? (briefly!)
How do you pay for your water services?
Do you know how much you pay for your water services?
(At this stage moderator to clarify any areas of misunderstanding - require statement of annual charges)
Have you heard anything in the news about Paying for Water Services? (do not prompt)
Have you heard about the Consultation being undertaken by the Scottish Executive entitled "Paying for Water Services 2006-2010"?
Where did you hear about it?
What you know about it? What is the purpose of it?
(Moderator to clarify discussion by describing consultation emphasise to make charging fairer as they are very likely to increase due to the need for investment - the amount depends on the investment levels decided by Scottish ministers (happening in parallel with this consultation) - Give out background info and read through)
I'd like to work through some of the Executive's proposal principles that might be used when setting the charges and how those principles might be applied.
Consultation Points One and Two
The Scottish Executive proposes that Scottish Water should pass all costs to their customers through charges. This would include providing water, treating water, maintaining infrastructure and improving it where required. There would be no element of profit: Scottish Water would only be recovering sufficient funds to pay for the services and any work that must be done.
Do you think this is appropriate?
What do you like/dislike about this idea?
Can you foresee any potential problems?
What other option might there be?
The Consultation proposes that charges should be as affordable as possible for low-income households. This does involve all other customers paying a bit more to subsidise low income households.
Is this an appropriate principle? - Why / Why not?
Can you see any ways this might present a problem?
What other ways of doing this might work?
The Executive proposes that customers should pay on the same basis wherever they are in Scotland. So that someone in Band A in Wick would pay the same as someone in Band A in Glasgow. (This is so customers aren't disadvantaged if they live in an area that is more expensive service because it's rural, hard to reach etc.).
Is this a reasonable way to operate charges?
What do you like / dislike about this idea?
What problems might this raise?
Are they any alternatives you can think of?
In the past there have been sudden increases that people have found hard to cope with. In the future all changes / increases will happen gradually. This consultation proposes that any future charge increases should be introduced changes gradually over 2006-10, or longer where necessary.
Consultation Point Three
Consultation Point Four
Water and sewerage charges to domestic customers are billed and collected by local authorities when collecting Council Tax. They do this on behalf of Scottish Water. (This is convenient for customers who pay one bill and cuts the cost of billing for local authorities and Scottish Water). This enables water and sewerage charges to be made on the basis of Council Tax bands). This in turn means that those in higher Council Tax bands (who tend to be better off) subsidise those in lower bands (who tend to be less well off). (NB Moderator: there are no plans to change this)
There is a 25% discount for single adult household. This gives discounts to single parents and single pensioners for example, but overall it does not reflect ability to pay. Therefore for example well-off single people receive a discount not available to couples on very low incomes. (Council Tax is different in that poorer households are eligible for Council Tax benefit).
This discount costs approx. £65 million a year. The Executive proposes to abolish this discount and use the money generated to fund a new discount targeted at those who receive Council Tax benefit. This would target assistance at for low income households.
Would it be appropriate to abolish this discount and replace with a discount targeted at low - income households or should the current system be maintained?
Why / Why not? What do you like / dislike about this idea?
What problems might arise?
What other option might there be?
There is also a 50% discount on water charges available on second homes. Therefore, owners of second homes (who will usually be well off) are again receiving a discount.
This discount costs approx. £10 million a year. The Executive proposes to abolish this discount and use the money generated to fund a new discount for low income households, those who receive Council Tax benefit.
Would it be appropriate to abolish this discount and replace with a discount targeted at low - income households or should the current system be maintained?
Why / Why not? What do you like / dislike about this idea?
What problems might arise?
What other option might there be?
Note to Moderator: There has been some suggestion it might be better to meter all households so they pay on the basis of how much water they use. As only a very small number of households are metered at present they would have to install 2.2 million meters (£150 each), read them regularly and replace every 5 or 6 yrs. This would add even more costs. Standing charges high to maintain costs. Also 80% of Scottish Waters costs are fixed no matter how much water is used.
Consultation Point Six
Most non-household premises are not metered and their occupants are charged for water and sewerage based on ratable value. Many people think this is unfair because some premises in city centres pay significantly more than those on the outskirts. This doesn't reflect the level use of water services. However, metering all properties would be expensive to install and maintain. So, the Executive proposes that for unmetered properties there might be 3 charge bandings based on likely consumption due to the nature of business. For example, Band 1 might be those with very low consumption, similar to a typical household e.g. corner shop, newsagent. Band 2 might be places where water was used as part of the business and or exceeded a typical household e.g. restaurant, hairdressers. Band 3 might be those with higher water consumption but still not metered. This band would determine the water charge.
Is it appropriate to introduce the system as described? (or is rateable value or metering a preferred option - why?)
What do you like/dislike about this idea?
Can you see any potential problems?
Can you think of another way of doing it?
Consultation Point Five
Surface and highway drainage - the non-household charges include an element to cover the cost to Scottish Water of receiving into the sewers rainwater from non-household premises such as roofs and car parks. This is a significant part of the service and the costs need to be covered. At present these charges are calculated on the basis of a ratable value but this can mean a shop with a high ratable value pays more than a shopping centre out of town with a low ratable value, although the latter would place far more strain on the system. This is seen by many customers as unfair. The Executive proposes it would be fairer to charge premises for drainage on the basis of surface area. E.g. properties with big car parks would pay more.
(Note to Moderator: Some customers have argued highway drainage costs specifically should be met by highway authorities. This ultimately means local authorities or the Scottish Executive who would pass the cost on through another form of taxation.)
Do you think the idea of charge bands based on surface area is appropriate?
What do you like/dislike about this idea?
Can you see any potential problems?
Can you think of another way of doing it?
Consultation Point Seven
Consultation Point Eight (Use Flipchart)
In some areas there is concern about a lack of capacity in the public water and sewerage networks, and the fact that and this can constrain new development. One option would be for customer charges to cover all the costs of new capacity on the network. This would mean existing customers paying to enable new customers when their charges have increased anyway. As an alternative, the Executive proposes that customer charges cover costs of maintaining, operating and upgrading the parts of the infrastructure which benefit everyone at its current capacity. Where additional capacity is required specifically for new developments, (i.e. benefiting only the new development) the developers would be charged for that part of the infrastructure.
Sum up and close