Hansard

I turn to the more difficult issue. Amendments 83 and 96 are similar in one critical respect: they rely on the same definition of a charity. That poses a real problem because the definition used in the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 would allow many premises owned by universities and local authorities that have been registered as charities to claim relief. Currently, such premises—Bruce Crawford referred to libraries, swimming pools and other sports facilities—do not receive relief and can be very large customers of the water authorities. Thus, were they to become eligible for relief in the future, the impact on Scottish Water's revenues, and hence on customer charges would be highly significant.Regardless of any concerns that people may have about relief, amendments 83 and 96 do not provide a feasible way forward. Rather, both schemes would open the way for a massive increase in the number of those eligible to claim relief. Presumably achieving such an increase is the SNP's objective in amendment 83. People must understand that there are about 30,000 charities compared to the 11,000 bodies currently receiving relief. The serious consequences for Scottish Water and thereafter, its charges to customers, can be quantified. If amendment 83 were to be agreed to, costs would increase from £11 million to £30 million. That is the equivalent of a 5 per cent increase in charges for domestic customers.Robin Harper had the honesty to suggest that that form of compulsory charitable donation should be distinguished in charge accounts. I do not share his view that domestic consumers would welcome the imposition of such charges or of a compulsory charitable donation, particularly if they realised that their donation would sustain golf courses, rifle clubs, tennis clubs and other institutions, including a significant number of private schools and—to name one specific example—Scottish Borders Council town halls. That form of compulsory charitable donation would not be supported by domestic consumers.The schemes proposed in amendments 83 and 96 would create an incentive for other organisations and individuals in domestic premises to seek charitable status to benefit from relief on their water charges. Again, that would increase the cost to consumers. I do not see how the water authority could be expected to administer such a scheme. That is why we have proposed a scheme that is restricted to those that currently receive relief. There is a fundamental objection that reliefs, which are based on the rateable value of the premises occupied and do not reflect the value of outputs of those charitable organisations, are not a sensible long-term means of providing support to the voluntary sector. That is the principle that underpins what we have to offer.In my letter to the committee of 15 January, I acknowledge that the Executive has recognised the committee's genuine concerns about the impact of withdrawing relief from water charges. That is why, last week, I announced a scheme to address those concerns. The scheme has two main features. First, it is restricted to organisations that are currently eligible for relief. That is because the aim is to help organisations that would otherwise be adversely affected by the withdrawal of reliefs, rather than to create a whole new mechanism for supporting charities generally. Secondly, the scheme is targeted at small organisations in eligible premises with annual income of less than £10,000 in respect to the premises. By concentrating on small organisations, the scheme seeks to address the committee's concerns about the impact of the withdrawal of relief on local organisations that do not get local or central Government support. Amendments 83 and 96 would not provide relief to such organisations because they are not constituted as charities.There has been criticism of the scheme that in practice it will not help many in the voluntary sector. I do not agree. The scheme will help those bodies that have incomes of less than £10,000 and premises that are currently eligible for relief. I cannot say with any precision how many bodies will benefit, because neither the Executive nor the water authorities has information on individual customer income—and nor should they.However, the purpose of the targeted relief scheme is not to assist a particular proportion of the sector but to assist those organisations in the sector that are on limited income. We were asked to present a targeted relief scheme and that is what we have done. If it turns out that many are in the low income category, many will benefit without restriction or cut-off. I agree with Angus MacKay that there is a dearth of reliable research in this area. The situation is not helped by the fact that, rightly, the water companies do not have statistics to hand on customer income. The most reliable piece of research on the subject is contained in the McFadden commission report on charity law. As Nora Radcliffe pointed out, annexe D of the report says that more than one third of Scottish charities have incomes of less than £5,000 a year and more than half have incomes of less than £25,000. It also notes that income levels vary between legal groups. I have produced an extrapolation—admittedly, it is an unweighted extrapolation—from the list of organisations in the report that shows that between 40 and 50 per cent of charities will benefit from the Executive's proposals. More important, the proposal covers small voluntary bodies that do not have formal voluntary status, such as parent and toddler groups and so on, which are precisely the groups at which the committee asked me to target the relief scheme. Much has been said about the Scottish Council for Voluntary Organisations. I invite it to provide reliable research that will allow me better to target the scheme. However, I have had no communication from that organisation that would lead me to think that it has research that is more reliable than that to which I have referred. To demonstrate that there is no prejudice against the voluntary sector, I point out that I have entered into correspondence on the subject of providing £55,000 to the SCVO to enable it to employ an additional employee in the Highlands. That is the sole nature of the business that I have had recently with that organisation.If it emerges that most of those receiving relief have incomes in excess of £10,000, I believe that, within four years, they will move to paying for their services in the same way as other customers. If the bill were amended in the way that has been suggested, the payments of many domestic customers on low incomes would increase to subsidise the charities, which would not be fair or equitable. A typical village hall faces a charge of about £200 to £400 a year. I have done a lot of research into the impact on such an institution of the withdrawal of relief. If the owner who is liable for the charge has an income in excess of £10,000, the charge will represent no more than 2 to 4 per cent of that income. An East of Scotland Water analysis of village halls in the east of Scotland shows that around 100 face a full charge of less than £300 once all reliefs are removed in four years' time. That is the equivalent of a £1-a-week increase in village hall charges in the coming financial year and will be shared among all the users of that establishment, although only the owner will be liable. There is no reason why scout troops or girl guide companies will necessarily have to pick up any proportion of that charge. However, if they did, they would have to pay only a proportion of the £1-a-week increase. Around 250 village halls in the east of Scotland face charges of between £300 and £600 at the end of the four-year period, which is the equivalent of an increase of between £1 and £2 a week in the coming financial year. Only 50 face the prospect of an increase of £2 or more per week as a consequence of the withdrawal of relief. For them, the metering option will be viable and beneficial, because they will presumably be based in premises with high rateable values and low water consumption.This is the right place to respond to claims that those not occupying premises, such as the scout and guide groups mentioned, will not benefit from the scheme. Those claims are essentially right, because if someone does not occupy premises they do not pay charges on which to get relief. That is one of the benefits of what is proposed. Jackie Baillie referred to the link between relief and premises. By having such a link, we minimise problems relating to income. Charges and relief applications relate not to the income of organisations, but to income in respect of premises.I remind members that eligible bodies will be entitled to a full four-year exemption—a 100 per cent exemption, as opposed to the 80 per cent exemption that currently applies. Previously, organisations would have to seek renewal of their exemptions. The administrative measure that we have taken is meant to cut red tape and to ensure that organisations receive more generous relief than that which they enjoy at present.For most organisations, the right approach is for them to take account of water charges in normal negotiations with their funders, just as they would take account of the changing costs of other services. I have referred to telephone charges and other utility charges. Robin Harper referred to the cost of food, which is not eligible for relief.The role of the Executive is to ensure that the total resources available to the voluntary sector allow our other objectives to be delivered. As members will know, the Executive has an excellent record of funding the voluntary sector. Direct funding for the sector has risen by £6 million, or 18 per cent, from £33 million last year to £39 million this year. Indirect funding provided through other public bodies, including local authorities and health boards, has risen by £35 million, or 13 per cent, to £304 million this year.Given that level of funding and the charges that will be paid by most voluntary organisations that receive relief, talk of hundreds or—as Robin Harper suggested—of 6,000 to 9,000 jobs being lost as a result of the phased withdrawal of relief is nothing short of irresponsible scaremongering. Over the past two weeks, a number of references to the possibility of job losses have been made in the press, but in every instance that we have checked those claims have been wildly exaggerated. For those claims to begin to be true, hundreds of organisations would have to be facing increases of more than £10,000 next year. That is not the position on the ground, where the great majority of organisations face increases of hundreds of pounds, at the most, if they face increases at all. As we have said on numerous occasions, the withdrawal of relief is being phased to allow organisations and their funders to adjust gradually to changing circumstances.A number of members have referred to the situation of hospices. I realise that hospices have been identified as being particularly hard hit by the decision to phase out relief and understand fully why that has attracted such concern. However, we must not lose sight of the facts. Water charges represent a very small part of a hospice's costs—probably less than 1 per cent of the total. Through health boards, the Executive already provides substantial funding for hospices that dwarfs the impact of any increase in water charges. This year that support amounts to £9.5 million, as compared to £9 million last year.The case of St Margaret's hospice in Clydebank has been referred to. St Margaret's is the largest hospice in Scotland. Fiona McLeod suggested that from 1 April it could face a bill of £14,000 a year. It will not. Its bill in the next financial year is likely to be nearer £7,000 as relief begins to be phased out over four years from 1 April. I am not saying that £7,000 is a negligible sum; nevertheless, that figure should be viewed in the context of health board funding, which amounts to £1.9 million of indirect Executive support for St Margaret's this year. What is true for St Margaret's is also true for the rest of the hospice sector and, more widely, for the independent care sector. The impact of charges will be measured in thousands of pounds, whereas the total support for hospices and the sector is measured in millions of pounds. By my calculation, the prospective increase will be less than 0.3 per cent of the total Executive support. It is important that that is viewed in its appropriate context.The Scottish Executive is clearly committed to ensuring the appropriate funding of voluntary hospices. That is why the Executive is involved in discussions with hospices and health boards on general funding issues. I assure the committee that, following discussions with Malcolm Chisholm, the impact of water charges will be taken fully into account in those discussions on the levels of funding support for hospices.Bruce Crawford asked me to provide information on the independent care sector. The same principle applies to that sector as applies to others. Providing relief is not an appropriate way in which to support the delivery of our objectives, not least because care homes that are charities will receive relief whereas others that are run commercially will not. The right approach for the Executive to take is to provide money where it is needed, which is what we are doing.In the care home sector, as in the voluntary sector as a whole, to which we are giving a massive increase in support, the Executive has a good story to tell. It is committed to providing an extra £17.5 million to the sector—£7.5 million this year and £10 million next year—to allow it to meet a range of increased pressures. The impact of the withdrawal of relief must be viewed in that broader context. The Executive is considering care home costs with the national review group that comprises the Executive, COSLA, Scottish care representatives from the voluntary sector and others. Our aim is to produce an agreed framework for determining fee levels that takes account of a range of costs. Such costs will include water charges and fuel costs.Those detailed discussions are continuing and I am happy to announce that significant progress is being made on the way in which the increases are to be funded. An announcement is expected shortly. That announcement will be based not on a line-by-line analysis of costs, but on the Executive's commitment to fund real-terms increases to the sector over the next three years, irrespective of water charge relief. The context is important. A water charge of perhaps £200 per patient per year should be viewed in proportion against total patient costs to the Executive of £300 to £400 a week.I apologise for taking up so much time. Members will appreciate, from the level of the detail that I have outlined, the work that is in progress towards fine-tuning the scheme. A great deal of work is under way to meet the committee's objective of introducing a targeted relief scheme that will help organisations on low incomes that are not in receipt of direct or indirect Government funding. That is what we were asked to do. The Executive is considering more widely the impact on the care sector and the voluntary sector of the withdrawal of relief. That work is under way and the assurances that I have given the committee are an example of that.The Executive has proposed a scheme that offers valuable assistance to those in the voluntary sector that need it. I hope that the committee will recognise that, in contrast, the amendments' reliance on the current statutory definition of charities does not provide a realistic way forward. I hope that Richard Lochhead will withdraw his amendment and that Jackie Baillie will not move hers.I give the assurance that I have given throughout the exercise that I am happy to meet members and all interested organisations to discuss the principles and to improve the scheme where possible to meet the committee's needs and ambitions. Such discussions would take place in the context of the targeted relief scheme for which the committee asked. In the longer term, wider provision will be made for those charities and voluntary organisations that could be adversely affected and whose substantial water consumption might detract from the benefits that metering will bring. That will be considered in the wider context of Executive funding for the sector and for care homes, hospices and other premises.