Petition to the Scottish Parliament (presented to Petitions Committee, Scottish Parliament by Bo'ness means Business) with regard to the current water charges levied by Scottish Water.
Bo'ness means Business, local business group, believe that the current level of water charges are detrimental to the long term future of Bo'ness Town Centre and are placing an unfairly levied burden on businesses of all sizes and in particular small town centre retail outlets facing a historical long-term decline in local shopping patterns.
Declaration - Reason for Petition
Burden
Water charges as applied currently are placing a major burden on business of all sizes but particularly small business where the charges represent a significant cost often difficult to recover given location, type of activity or size of operation.
It is understood and accepted that necessary improvements are only achievable through considerable investment to bring Scotland's water facilities and quality up to the required standards.
That is perfectly acceptable and not in dispute. It is the methodology used in arriving at the applied charges. It is the balance between standing and volumetric charges together with the time scale outlined for recovery of investment debt that is having a detrimental and debilitating affect on business and particularly small businesses that is the main issue.
Town Centres
This petition is being presented, in the main, on behalf of Bo'ness town centre businesses that provide a service to local residents within Bo'ness but the burden of current water charges equally applies to businesses of all sizes.
Responsibility
The burden of responsibility for lack of investment in water industry infrastructure has passed from local and central government on to the shoulders of both water consumers and business users.
Local/Central Government
Historically, central government was responsible prior to regionalisation and devolution and the ultimate purse holders of local government investment plans.
Local government through regionalised water authorities, prior to rationalisation of water industry, had overall responsibility for water supply, treatment and quality.
It is during this period and over many years that Scotland's water boards/authorities were starved of investment, by successive administrations, which has resulted in the present situation and condition of Scotland's water infrastructure.
Scottish Executive
The Scottish Executive are now responsible body for environmental and water issues since devolution, initially through the three regional authorities, and now since 1 April 2002, through a private/public partnership in the form of Scottish Water.
It is believed that it is only the Scottish Executive that can take cognisance of this growing concern affecting business and through legislation make the necessary changes to alleviate the growing and inevitable consequences.
Business
It is believed, and felt by not only this group but also many others, that Scottish businesses are being unfairly penalised for years of neglect during which either by lack of foresight, design or simply ignorance of the growing problems in the water industry, the necessary investment was not undertaken.
There is a growing feeling that business is being penalised for this lack of investment and in affect being charged again for renewal and maintenance which had been and should have been previously accommodated through the collection of water rates.
Small Business
It is an unfortunate reality that it is small business that are affected most with the level of charges representing a considerably higher percentage of their overall cost structure.
The above is particularly relevant in the case of small town centre retail outlets who are dependent on footfall and passing trade and have been under pressure for many years due to changing retail shopping patterns in the form of out-of-town shopping centres, often in the past promoted by government and enterprise bodies.
In this already difficult trading environment any additional and disproportionate increase in costs can often make the difference in the viability of a small business.
Large Business/Corporates
Large business is less affected with water charges representing a considerably smaller proportion of overall costs.
Although this is the case the increase in water charges still represents a major cost that has to be absorbed and will inevitably be passed on to customers.
Additionally, there is the opportunity under Water Industry (Scotland) Act 2002 section 31 (6) for very large users to enter into dialog with Scottish Water and reach a commercial agreement on charges.
Implications
This is not restricted to Bo'ness alone but is a problem for all small towns throughout Scotland who have experienced similar decline in local industry over the past 25/30 years. As indicated above the problem affects all business both large and small whether they depend on town centre footfall or not.
Much is made by government of the need to encourage the birthrate and expansion of small business in the UK with the consequent benefits to the economy (the vast majority of the working population is employed by this sector). Scotland suffers in this respect with both a below average level of new business growth and lower economic growth. These charges, particularly as they affect small business disproportionately, can only be detrimental and do nothing to improve either growth rate.
Regeneration
With the demise of local and traditional manufacturing industry tourism and the service sector are promoted by all levels of government as the solution to current low economic growth.
Scottish Executive
Scottish Executive published plans for tourism development together with local enterprise companies. Regeneration of town centres and related tourism initiatives trumpeted as means to provide towns with the facilities to attract and service visitors' needs.
Local Plan
Falkirk Council's Bo'ness Local Plan adopted 1997 stresses the value of a vibrant town centre in the development and overall regeneration of Bo'ness.
It highlights its history, location on the Forth and architectural heritage as major attractions in its long-term future. Indeed recent initiative in the form of THI (Townscape Heritage Initiative) part financed through Lottery Heritage funding and expected additional funding to provide the kick-start needed for this regeneration.
Additional Concerns
It is felt that given the problems and burden that water charges are placing on business recent announcements that Scottish Water executives have agreed a bonus payment to themselves is both inappropriate and flies in the face of perceived fairness & justice.
Scottish Water justifies there charging structure on the basis that they have been agreed with the WIC (Water Industry Commissioner) and through statute in the Scottish Parliament and make no real effort to address the real and significant effect and consequences these charges are having on the viability of small business.
Conclusion
Businesses of all sizes and types are being penalised for years of lack of investment in infrastructure. They are being applied in an almost arbitrary fashion with little regard to the affect on small business.
As the ultimate arbiter and authority it is the responsibility of the Scottish Executive to ensure that the economic environment within which business operates does not place them at a major competitive disadvantage with the rest of the United Kingdom in terms of their operating costs affecting both short-term business viability and long term growth and employment.
Action Petitioned
1. Refer to Committee
Bo'ness means Business request the Petitions Committee refer this submission to the 'Transport and the Environment Committee' for consideration and evaluation with the view the charges levied by Scottish Water be reviewed with some urgency.
Comparison with England & Wales
As an indication of the need for a review of the charges comparing charges in England and Wales with those being charged by Scottish Water highlights the level of disparity being experienced by Scottish businesses.
Standing/Volumetric Charge
Both Scottish Water and water companies in England & Wales have fixed charges, in the main based on meter size and a volumetric charge for actual water used.
Comparing published tariffs for 2003/2004 highlights the areas of concern. In terms of volumetric charges the tariffs of £1.67/m3 charged by Scottish Water is more than double of that in England/Wales at £0.73/m3 (average of 30 charges).
It is in the area of the standing charge that the disproportionate levels are of most concern. As this petition relates primarily to the affect on small business the comparisons shown relate to the main meter sizes appropriate in this context:-
Meter size England/Wales (median chg) Scotland
(combined water/Sewage) (combined water/Sewage)
12/15mm £40 £300
20mm £50 £300
25mm £123 £700
highest
300mm £23,376 £478,000
2. Re-assess method of Recovery
Re-assess method of Recovery of Investment Costs
Standing/Charge
It is clear there is a vast discrepancy between the standing charges between England/Wales and Scotland. It would appear that they have been arrived at on the basis of the level of debt to achieve the required infrastructure improvements on a purely financial level with no consideration to the impact on users.
The committee is petitioned to additionally re-assess the basis on which these charges have been derived.
Timescale
One of the main contributing factors in the setting of these charges is the timescale laid down for the debt recovery in the spend necessary for the infrastructure improvement to be completed by 2006.
This should perhaps also be reviewed as unsupportable in light of the scale of charges and burden placed on business if this schedule was to be retained.
Privitisation
Although it has been stated by Scottish Executive that there is no planned policy for privatisation and any change to the legislation would need an act of parliament there is a worry that the timescale as outlined above and the need to achieve the infrastructure improvements by 2006 would provide a level playing field and lays the groundwork for the opening up the market to external contractors.
If this is the case it is penalising business for the benefit of some future private water operators and there is no guarantee that the process would provide any great reductions in charges post-privatisation.
Action Undertaken to Date
Correspondence
Scottish Water: Various businesses had correspondence with SW both in relation to having them explain the level of standing charge, issues relating to meter sizes and disparity between standing charge levels and actual water volume usage.
Meeting with Scottish Water
Meeting with Scottish highlighted the fact that the main responsibility lay with both the Scottish Executive and the Water Industry Commissioner (WIC) and that Scottish Water were primarily the instrument though which to achieve the improvements outlined.
It also highlighted some of the issues of meter sizes and premises having inappropriately installed meters resulting in some businesses being overcharged under the current charging structure.
Meetings with local MSP
Cathy Peattie, MSP attended both meeting arranged with Scottish Water and separate meetings with Bo'ness means Business to discuss the concerns of local businesses.
Undertaking of this Petition
Appendix A
Contact Details of Petitioners
Bo'ness means Business
101 Corbiehall
Bo'ness
EH51 0AU
Tel. 01506 517037
Fax. 01506 517038
Contact: Rob Willox, Chairman
mailto:rob.willox@business.bo-ness.org.uk [1]
Related Items
http://www.scottish.parliament.uk/business/committees/historic/petitions... [2]