Matthew Baker reports on how astronomical water bills threaten the survival of community sports clubs
In the end, it was billed as a grassroots campaign triumph. As United Utilities finally bowed to public pressure and agreed to suspend the introduction of new water charges that would have seen some community non-profit sports clubs face astronomical increases in their water bills, you could almost hear the collective sigh of relief across the North-west.
But the news is not all good. United Utilities is insisting that those clubs that already have been hit with swingeing rises in their water bills must still pay up, The Groundsman understands.
“These extra charges could have been the death knell of small local sports clubs,” said Southport and Birkdale Sports Club cricket president Ken Standring after the water utility giant announced a moratorium on the site charging of water for community groups.
But any celebrations by campaigners over United Utilities’ climbdown were largely muted after it was revealed that the delay in introducing the controversial new system of charging for surface water and highway drainage is only set to last a year.
Even so, the temporary reprieve has almost certainly saved some sports clubs from extinction. For now. Under the changes in the way United Utilities charged non-domestic users for surface and highway drainage, using the surface area of their properties as the basis, rather than council tax banding, bills that were once manageable for small sports clubs suddenly became frightening.
Even the regulator, Ofwat, noted that United Utilities made “mistakes in implementing the changes, which included miscalculating the site area of some customers’ premises. These mistakes led to confusion and inconvenience for some customers”.The confusion, however, quickly turned to anger as the bills landed. Mellor Sports Club in Stockport, for example, saw its bill rise from £800 to £6,000 a year. Clitheroe Cricket, Bowling and Tennis Club has seen its rise from £200 per annum to £3,000. And Wallasey Manor tennis club saw its bill for taking water from the land increase from £213 last year to £5,700 over a three-year period.
The anger felt by clubs whose very existences were suddenly under threat has been mirrored by the public and the media.
The most popular petition on the official website of the Prime Minister, with over 42,000 signatories, asks Gordon Brown to intervene; thousands more have signed Brian Moore’s Daily Telegraph petition - is it right to support a company that is effectively in the process of dismantling our sporting heritage? he asks; and MPs from across the political spectrum have been quick to express anger at the way United Utilities ushered in the changes.
“I still think they [United Utilities] don’t get what these charges mean to sports clubs,” says Barbara Keeley, the Labour MP for Worsley. “I’m starting to get angry. I’ve had a long correspondence with United Utilities and all they can say is that if people are struggling they can look at different payment methods. I don’t think they understand how difficult it is for sports clubs like Little Hulton cricket club, in my constituency, to find an extra £1,000 this year.”
Referring to the moratorium as “a step in the right direction”, she said that she and many other MPs would carry on campaigning to safeguard local sports clubs from the punitive charges, as those who are not registered as community amateur sports clubs will still be charged the full amount this year.
She also offered a glimpse into how the issue of these controversial charges, often referred to as ‘rain tax’, was viewed at the highest level of Government. “Ministers have laid it on the line with Ofwat,” she said. “They’ve been told to sort it out or the Government will have to legislate.”
When asked by STAL about these comments, the Water Minister, Huw Irranca-Davies, was a little more circumspect. “There is something clearly very wrong for community amateur sports clubs, scout groups and places of worship to be faced with such astronomical increases in their bills and I am pleased that commonsense is prevailing,” he responded. “We will need to look closely at what is being proposed and how it will work but it is certainly a step in the right direction.”
Acknowledging the huge campaigning interest in the charges, he added that he had recently met with former England rugby union star Brian Moore and former England cricket captain Mike Gatting to discuss the impact that new water charges were having on sports clubs.“We had a very constructive meeting where I made it clear that I am adamant that community amateur sports clubs should not be faced with astronomical and unfair bills,” he explained. “All water companies are able under existing rules to take account of the impact of bills on different groups of customers.”
But if behind the scenes pressure has been put on Ofwat and United Utilities to rethink the scheme, the Department for Environment, Food and Rural Affairs (DEFRA) was fairly unambiguous in declaring that any such move by water companies was a departure from Government guidance.
“DEFRA ministers are very concerned about this issue,” said the DEFRA spokesperson. “Its view, which they have already expressed to all the main parties involved, is that something is clearly very wrong if community amateur sports clubs are facing hikes in their bills of several hundred per cent, coupled with massive variations between what is being charged in different areas. It is also clear that these increases are not in line with DEFRA’s guidance to Ofwat or Ofwat’s own guidance to water companies.”
In which case, it seems only fair to expect similar scrutiny to fall upon other water companies that are adopting similar charging methods. When questioned, Yorkshire Water, Northumbrian Water and Severn Trent all admitted to using the new calculation method called ‘site charging’ for surface water and highway drainage services. All three companies refused to comment on United Utilities’ charging methods and generally distanced themselves from the controversy generated by the UK’s largest listed water company.
Severn Trent and Northumbrian Water both admitted to introducing the new charges on a phased basis, while Yorkshire Water said that it had been using site charging since 2001 and to the best of its knowledge, “no community sports clubs” had been forced to close as a result, a spokesperson claimed.
But if sports clubs in the North-west are facing extinction because of the huge increases how can similar clubs elsewhere avoid similar threats to their existence?
A spokesperson for Severn Trent Water said any problems with smaller non-profit organisations struggling to abide by the new charging scheme was the regulator, Ofwat’s responsibility – and ultimately a matter that Government would have to legislate on.
Admitting they had been watching the United Utilities backlash with interest, Andrew Marsh, public affairs manager for Severn Trent Water, said they had not charged smaller, voluntary sports clubs under the new charging system yet. “It’s due to come in from April 2010 and we’re negotiating with Ofwat to get as long a phasing-in time as possible.”
He added that in the past, water companies have made limited exclusions from surface water drainage charges. “However, the regulator has now advised us to remove these exemptions, and move to site area-based charges for all customers. “This is because the law requires us to ensure that charges are neither unduly preferential nor unduly discriminatory towards any class of customer. We are currently reviewing how we will make these required changes to our charging policy from 2010, as we are very aware that affected customers could see a significant rise in their annual water bills.
This is why we intend to phase the new charge in over a number of years,” he explained. “This will help customers absorb the impact more easily. We will also be happy to advise affected customers on water efficiency measures and reducing the amount of hardstanding on their properties, which could help lower the metered charges. Ultimately though, the only way to resolve the issue is for legislation to be changed to allow us to continue with the current exemptions in our existing charging policy.”
If such regulation is to be put on the statute book it will require continued pressure from backbench MPs, and Lindsay Hoyle, Labour MP for Chorley, is one of many MPs who have promised to ensure the issue doesn’t fall off the ministerial radar. “The 12-month moratorium gives us the opportunity to continue placing pressure on the water companies, the regulator and the Government to ensure a fairer system of charging is introduced,” he explains.
Equally unrelenting in his willingness to pressurise United Utilities is Labour MP for Denton and Reddish, Andrew Gwynne. “What United Utilities wanted to do was outrageous and would have closed hundreds of local groups in the region,” he said. “However I now want to see United Utilities scrap the extra charges on those already billed as their announcement only covers those groups which haven’t been billed. I think that’s wrong.”
One club that concurs with that sentiment is Penrith Rugby Union Football Club. Having failed on a technicality to meet HM Revenue & Customs criteria to register as a community amateur sports club, the club will not be exempt. “Our bill last year was £671 and it’s set to go up to £10,896 in the next three years,” explained club treasurer Chris Lilley. “We’ve also seen significant increases in our gas and electric bills along with business rates. We’re expecting to make a loss of around £10-15,000 this year so we’ll have to make cutbacks, as we can’t carry on like this.”
Currently considering taking legal action against United Utilities, Lilley believes his club has been wrongly charged because United Utilities has calculated the club’s car park as rateable, even though it uses a soakaway, which stores the immediate stormwater run-off to allow infiltration into the adjacent soil.
He argues that United Utilities is encouraging customers to look into options to prevent rainwater draining into sewers, yet will not allow his club to claim any concessions on achieving this.
“Their argument for refusing to accept our soakaways is totally flawed,” he says, pointing out that the club is collecting surface water and allowing it to drain away naturally. “We should be in a lower band because we have tennis courts based on a permeable surface and effective soakaways. But they’re not recognising this.”
The club’s bill is split into two elements: surface water drainage and highways drainage. The latter part covers the cost of removing rainwater which falls on to the public highway. United Utilities will reduce bills for surface water drainage when impermeable areas drain to soakways or streams but will not concede this for the highways drainage element, he argues.
“They will not make any reduction for the soakaway that our 5,500m2 car park drains into,” he explains. “Technically, both soakaways and permeable asphalts do exactly the same: stop rainwater from immediately hitting the drains which can contribute to localised flooding. So why do they allow one and not the other?”
He also argues that the same area of land under the new way of charging would result in significantly lower costs under calculations by different water boards. “There is a big variation in how water boards are calculating their bills for sports clubs,” he said. “I’ve looked at how Yorkshire and Northumbrian water boards are calculating site area charging and the difference is huge.”
Appeals to the Consumer Council for Water and United Utilities have fallen on deaf ears, he says, leaving few remaining options other than legal action.“We are a sporting organisation with a social enterprise ethos in that any ‘profits’ are ploughed back into the sport,” he argues. “We believe that such community-based sports clubs should not be classified as businesses but should be subject to the same rates as other social community based projects such as schools and churches.”
The club’s record of investing more than £100,000 into junior rugby over the last five years is a proud testament to its commitment to nurturing grassroots talent. If it is forced to accept the swingeing added costs then the future of junior rugby at the club – 12 junior teams are currently supported – could be in doubt.
Is this really what Ofwat had in mind when it issued guidance on alternative charging methods that demanded companies be “fair and equitable” while making sure that any new charging system be “simple to administer and understand”?
Certainly some campaigners believe that while Ofwat is pushing water companies to adopt area-based charging as opposed to the traditional rateable value arrangement, the regulator is unlikely to be overly critical of United Utilities because it is are effectively defending its own policies.
Ofwat’s defence is that the water companies are not making an extra profit out of this new charge and that previous bills for community clubs were an inaccurate measure of the services they were paying for.“Previously, some non-domestic premises such as churches, schools and charitable organisations were given zero or artificially low rateable values,” the website claims. “This meant they either had no charge for surface water drainage or a small nominal charge imposed by the company.
“Therefore these premises were either not paying at all, or paying very little, for the service, which meant other customers previously subsidised these.”
As a consequence, organisations like Clitheroe Cricket, Bowling and Tennis Club find themselves facing bills 15 times more expensive than usual. “If the water authorities insist on charging in this way, it could put an awful lot of sports clubs, including ourselves, out of business,” explained club chairman Robin Sharp.
“The water authorities do not differentiate between industrial users, non-profit making organisations and domestic users as the Inland Revenue, the Customs and Excise and the local authorities do, they simply charge a rate for industrial users and domestic users. So, Clitheroe Cricket, Bowling and Tennis Club is charged as an industrial user, in other words, the same rate as Manchester Airport.”
According to United Utilities, such a system “provides a more cost-reflective
and fairer way of charging for surface water and highway drainage services, and one that is not influenced by the location of a site.” But as long as this system threatens to rip up the very fabric of Britain’s grassroots community sport then it’s clear that a temporary halt to proceedings is not the answer.
As Water Minister, Huw Irranca-Davies has warned: “We expect the water companies to adopt a more compassionate and understanding approach to the sometimes quite astronomical increases in bills. Where you have small organisations dependent on voluntary donations, the collection plate or small incomes, the charges should be applied with minimal impact.”
But the question is: are the water companies listening?
How clubs can reduce water charges
Checking your water company’s estimate of the site area is correct
Companies that charge surface water drainage by site area will have made an estimate of the site area, which may be incorrect. If you believe there has been a miscalculation, contact the water company.
Checking your water company’s estimate of chargeable site area is correct
Your water company may also have not taken account of site area where natural drainage occurs. You should only be charged for surface water drainage for areas which, directly or indirectly, drain into public sewers.
Therefore, areas which drain naturally, such as sports fields or gravel car parks should not be included in the chargeable site area.
Reducing the amount of surface water on your site
You can also take action to reduce your charges by reducing the amount of surface water on your site that drains into the public sewers. Some of the ways of doing this include:
Installing a soakaway
A man-made hole filled with gravel. It collects water and allows it to disperse and drain naturally away.
Changing impermeable areas to permeable ones
Natural drainage can be promoted by converting areas which do not allow water to soak through, such as an asphalt car park, to ones which do, such as a gravel one.
“We’re listening to what our customers are saying”
As the Groundsman goes to press, United Utilities made another important announcement on top of its decision to freeze the new charging scheme for a year.
Taking into account the number of sports clubs which have not been able to register under the rigorous HM Revenue and Customs criteria as a community amateur sports club (CASC), United Utilities has decided to issue more relaxed criteria to enable sports clubs to become exempt from the new charging scheme that’s now due to come into force in 2010 when the moratorium ends.
This will not be issued retrospectively, so clubs that have received bills this year under the new charging scheme will still be obliged to pay them.
“We’re listening to what our customers are saying and asking what more we can do within our licence,” explained United Utilities’ head of communications, Shaun Robinson.
“We are now encouraging all North-west amateur sports clubs to complete Section B of a Site Area Charging Form that we have posted to them today [Friday 13 March 2009],” he added.
“We understand that many clubs do not want to apply for full CASC membership, so to make this process as simple as possible as long as a club can answer ‘No’ to our three questions its becomes eligible to revert to the old rateable value charging for the period 2009/2010 without becoming CASC registered. If a club is already registered, all it has to do is provide us with the registration number.”
The three questions to which clubs must answer ‘No’ to be exempt from the new charging scheme, are:
- Does the club charge a joining fee?
- Is the annual membership fee more than £400 per person per year?
- Does the club pay a fee for any members to play for the club?
Checking your water company’s estimate of chargeable site area is correct