Charities urged to rip up water bills

New rules will soon settle which Scottish bodies are exempt from water rates. Julie Pybus finds charities are left angry and insecure

The Scottish Council for Voluntary Organisations (SCVO) is advising charities not to pay their water bills until the Scottish Executive clarifies new rules determining which organisations are exempt from water charges.

In the latest phase of the six-year water-rates war between Scottish charities and the Government, the Scottish Executive has introduced a new system for calculating which charities are eligible for relief on their water rates. Although this system came into force on 1 April, the details have not yet been confirmed, leaving many charities in the dark about whether they are facing bills of thousands of pounds for this year.

The water-rates battle commenced in 1996 when the power to determine water-rates exemptions was transferred from local authorities to three new Scottish water authorities. Before this, charities could apply for at least 80 per cent exemption from water rates. (Charities in England and Wales do not pay water rates due to differences in the billing systems.)

The new water authorities, under pressure to improve the Scottish water quality, gradually stripped away charities' water rates relief, culminating in 1999 when it was proposed that all charities would have to pay water rates. However, a fierce campaign by the SCVO resulted in a stay of execution for the voluntary sector to allow a debate to take place.

As a result of the following years' discussions, the Scottish Executive's new scheme supersedes previous plans. It is based on a limited exemption scheme cushioned by a hardship fund for those charities that fall outside its net.

As of 1 April this year, coinciding with the creation of a new unitary authority, Scottish Water, water charges will only be levied on premises housing voluntary organisations with an income of £50,000 or more a year.

The hardship fund is a pot of £500,000 for each of the next two years to be given to charities that can prove they will experience difficulties by losing their water-rates exemption. A spokesman for the Scottish Executive said: "We held very detailed discussions to establish that this £50,000 net would catch a large number of voluntary organisations.

He added that those organisations that don't qualify for relief would be expected to add the extra fees to their core costs when they bid for funding.

The details of the scheme are still being thrashed out by the Scottish Executive and Scottish Water, and are expected to be settled in the next few months.

Jim Lugton, senior policy officer at SCVO, said the new system is "bureaucratic and complex

and argues that many more charities will fall outside the net than the Scottish Executive anticipates.

The YWCA's Roundabout Centre, a community organisation that supports ethnic minority women and which received 80 per cent water-rates relief in the past, has received a water bill for £2,000, backdated to March 2001. Its manager Emma Crawshaw has refused to pay it. "Scottish Water is enforcing the charges, regardless of the legislation,

she said. "I find this quite intimidating and we don't have the money anyway."

If the YWCA has to pay the water bill, Crawshaw anticipates that it will have to close down a support group for mixed-race children.

The Scottish Executive is advising charities to pay up and then ask to be reimbursed when the new scheme is up and running.

SCVO would, ideally, like all voluntary organisations to be exempt from paying water rates - this was recommended by the McFadden Commission's report into the future of the Scottish voluntary sector. But the Scottish Executive spokesman said: "Very rich organisations that could easily afford the charges would become exempt. We thought that this would be inequitable."

The McFadden report is due to be debated in the Scottish Parliament in 2003/4. "A Pandora's box is going to be opened when we get into discussions about this report,

says Lugton. "It has already been a protracted debate - and it isn't over yet."

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